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MACMILLAN'S    COMMERCIAL  >SERiE^;^^,  ]'/,  ^,  ^  i  y 


COMPREHENSIVE   BOOKKEEPING  ' 


A   FIRST   BOOK 


BY 


ARTEMAS   M.   BOGLE,  A.M. 

DEPARTMENT  OF  MATHEMATICS,  HIGH  SCHOOL,  KANSAS  CITY,  KANSAS 


Nebj  iorft 
THE    MACMILLAN    COMPANY 

LONDON:   MACMILLAN  &  CO.,  Ltd. 
1905 

All  rights  reserved 


sE^fmi 


Copyright,  1905, 
By  the  MACMILLAN  COMPANY. 


Set  up  and  electrotyped.     Published  September,  1905. 


PREFACE 

This  work  is  the  result  of  several  years'  experience  in 
teaching  bookkeeping  and  other  branches  of  mathematics  in 
public  and  private  schools  and  in  normal  institutes.  The  task 
that  the  author  set  for  himself  was  to  furnish  a  book  that 
would  be  comprehensive  and  definite,  and  at  the  same  time 
flexible  and  adaptable,  —  one,  in  brief,  that  would  give  a 
general  knowledge  of  the  subject  and  also  lend  itself  to  the 
varying  conditions  under  which  it  might  be  used. 

The  aim  of  this  text-book  is  to  ground  the  student  in  the 
general  principles  and  processes  of  accounts  and  to  acquaint 
him  with  the  simpler  forms  used  in  commercial  bookkeeping. 
There  are  given  also  some  suggestions  for  practical  private 
accounts  for  those  who  have  no  need  of  a  complete  set  of 
books.  It  is  the  aim  also  to  put  into  the  hands  of  the  experi- 
enced teacher  a  quantity  of  material  in  such  form  that  it  can 
be  used  much  in  his  own  way.  The  directions  given  through- 
out the  text  are  to  be  treated  by  such  a  teacher  as  suggestions 
merely.  On  the  other  hand,  the  directions  and  explanations 
are  given  in  sufficient  detail,  it  is  thought,  to  enable  the 
inexperienced  teacher  of  bookkeeping  or  the  unaided  learner 
to  use  the  work  successfully. 

The  subject  is  gradually  developed,  the  number  of  new 
points  introduced  at  each  stage  being  limited.  Also  provision 
has  been  made  for  drills  on  all  points,  so  that  each  may  be 
mastered  as  it  is  introduced.  A  number  of  the  sets  appear 
in  two  divisions,  designated  A  and  B.      The  A  sets  may  be 


t  i-\^S2 


vi  Preface 

used  for  drill  in  class  or  may  be  written  up  as  a  preparation 
for  the  B  sets.  The  material  for  the  B  sets  is  more  concrete, 
and  in  them  the  computations  must  be  made  by  the  student. 
They  thus  provide  material  for  heavier  work.  The  A  sets 
and  those  which  are  designated  without  letters  may  be  used 
alone  for  a  continuous  course,  or  the  B  sets  may  be  used  in 
a  similar  manner.  The  A  sets  Avill  be  found  especially  ser- 
viceable for  those  cases  in  which  it  is  desired  to  obtain  a 
general  knowledge  of  bookkeeping  with  the  least  expenditure 
of  time. 

Each  set  is  divided  into  several  exercises,  and  each  of  these 
may  be  used  independently,  or  any  number  of  exercises  in  the 
same  set  may  be  grouped  together.  This  makes  it  possible 
to  have  short  sets  or  longer  ones  as  desired,  and  the  work 
may  close  with  any  exercise  of  a  set.  This  arrangement  will 
enable  a  teacher  to  vary  the  work  somewhat  with  successive 
classes. 

Again,  the  division  of  the  sets  into  exercises  makes  it  pos- 
sible to  adapt  the  work  to  the  ability  of  the  student.  If  he 
has  mastered  the  new  points  of  a  set  at  the  end  of  any  exer- 
cise, he  can  close  his  work  at  that  exercise  just  as  well  as  at 
the  last  exercise  of  the  set,  and  thus  pass  at  once  to  the  next 
set.  Some  teachers  may  desire  to  give  special  work  in  some 
particular  book,  as  the  cash-book  or  the  sales  book.  For  such 
work  the  student  may  select  from  the  sets  the  records  of  the 
kind  of  transaction  desired  and  arrange  them  for  practice. 
Indeed,  in  some  cases  it  is  better  for  the  student  to  write  a 
large  number  of  transactions  in  only  one  book  at  a  time  until 
that  book  is  thoroughly  understood.  To  younger  persons, 
especially  those  in  rural  schools  and  the  grammar  grades,  it 
may  be  better  even  to  give  practice  in  writing  up  separate 
accounts,  as  with  cash  or  merchandise,  before  writing  up  com- 
plete sets.     Further  suggestions  for  such  work  will  be  found 


Preface  vii 

on  page  119.  It  is  advised  that  all  students  do  some  work  of 
the  kind  there  explained,  even  though  it  may  be  necessary  to 
omit  other  portions  of  the  text.  The  special  character  of  the 
different  exercises  and  sets  is  shown  by  the  table  on  page  138. 

It  is  not  always  best  to  have  all  the  members  of  a  class 
write  the  same  exercises.  When  combining  two  or  more 
exercises  into  a  single  one,  some  students  may  write  1  and  2, 
others  2  and  3,  and  others  3  and  4.  With  mature  students 
it  may  not  be  necessary  to  give  work  from  each  set.  When 
this  plan  is  being  followed,  work  may  be  given  to  some  from 
Sets  IV,  VI,  and  VIII,  for  instance,  and  to  others  from  Sets 
V,  VII,  and  IX.  If  it  is  desired  to  have  the  students  do  still 
more  independent  work,  each  may  make  up  a  particular  price 
list  for  himself  by  adding  a  certain  sum  to  each  of  the  prices 
given.  Or  each  student  may  make  up  a  price  list  without 
any  reference  to  the  prices  given  in  the  set. 

Most  of  the  exercises  in  this  book  have  been  prepared  pri- 
marily for  work  in  double  entry,  but  a  large  part  of  them 
will  be  found  equally  well  adapted  for  work  in  single  entry. 
Hence,  no  special  exercises  have  been  prepared  for  this  pur- 
pose, except  those  that  are  given  to  illustrate  the  method  of 
changing  from  single  entry  to  double  entry.  If  a  shorter  and 
easier  course  is  desired  than  that  afforded  by  using  all  this 
text,  pages  95  to  109  may  be  omitted. 

The  author  wishes  to  acknowledge  his  indebtedness  to  those 
who  have  aided  him,  among  whom  are :  Mr.  M.  S.  Cronk, 
Principal  of  Towanda  (Pennsylvania)  Business  College,  for 
material  help  on  the  original  manuscript ;  Mr.  George  E.  Rose, 
Superintendent  of  Schools,  Rosedale,  Kansas,  for  helpful  sug- 
gestions regarding  definitions  and  the  teaching  of  the  subject; 
Mr.  W.  W.  Douglass  of  the  English  department  of  the  Kansas 
City,  Kansas,  High  School,  for  valuable  hints  while  the  manu- 
script was  undergoing  its  final  revision ;  Mr.  J.  E.  Sterrett, 


viii  Preface 

Philadelphia,  a  certified  public  accountant  of  large  experience, 
for  his  suggestions  from  the  point  of  view  of  the  business 
world;  Mr.  Edward  M.  Williams  of  the  Morris  High  School, 
New  York  City,  for  reading  the  manuscript  before  publication 
and  for  suggested  improvements;  Mr.  Durand  W.  Springer 
of  the  Ann  Arbor,  Michigan,  High  School,  for  further  im- 
provements to  the  book  while  it  was  in  proof;  and  especially 
Dr.  Cheesman  A.  Herrick  for  his  advice  and  suggestions, 
which  had  not  a  little  to  do  with  the  final  shaping  of  the  work. 
The  pen  work,  from  which  the  excellent  reproductions  have 
been  made,  was  by  Mr.  E.  C.  Mills  of  Rochester,  New  York. 

A.  M.  B. 
Kansas  City,  Kansas, 
June  1,  1905. 


CONTENTS 

PAOB 

Preface v 

Editor's  Introduction xiii 

Preliminary  Definitions 1 

A  Tabular  View  of  Bookkeeping 4 

Development  of  Bookkeeping —  The  Fundamental  Principle  of  Double 

Entry  Bookkeeping 5 

Rules  for  Journalizing 6 

INTRODUCTORY  SETS 

Exercise  for  Illustration 9 

The  Journal  Illustrated 11 

The  Ledger  Accounts 12 

Balancing  the  Accounts .13 

The  Ledger  Illustrated 14 

Set  A.     Transactions   containing  Personal,   Cash,   and  Merchandise 

Items 16 

Set  B.     Transactions   containing   Personal,   Cash,   and  Merchandise 

Items 19 

COMPLETE   SETS 

The  Day-book .  21 

The  Day-book  Illustrated 22 

The  Journal 24 

Proprietor's  Account  Explained 24 

The  Journal  Illustrated 25 

The  Ledger 27 

The  Trial  Balance 27 

The  Ledger  Illustrated 28 

Errors  and  their  Detection 31 

Closing  the  Ledger 32 

The  Second  Trial  Balance       .        '. 36 

ix 


Contents 


PAGE 


Condensed  Directions  for  writing  a  Set  .......  38 

Exercises  in  closing  the  Ledger 39 

Set  I   A.     Transactions  involving  Expense  Introduced          ...  43 

Set  I   B.     Transactions  involving  Expense  Introduced           ...  46 

Promissory  Notes 48 

Interest 54 

The  Bill-book 55 

The  Journal-day-book 55 

The  Bill-book  Illustrated 56 

Set  II   A.     Bills  Receivable,  Bills  Payable,  and  Interest  Transactions 

Introduced 57 

The  Journal-day-book  Illustrated 58 

Set  II   B.     Bills  Receivable,  Bills  Payable,  and  Interest  Transactions 

Introduced 60 

Set  III   A.     Real  Estate  Transactions  Introduced          ....  62 
Set  III   B.     Real  Estate  Transactions  Introduced          .        .        .         .65 

Compound  Entries 67 

The  Cash-book 67 

Set  IV   A.     Cash-book  Transactions 70 

The  Cash-book  Illustrated 72 

Set  IV   B.     Cash-book  Transactions 74 

Transactions  involving  a  Part  Payment  in  Cash 76 

Discount 76 

Set  V   A.     Discount  Transactions  Introduced 77 

Set  V   B.     Discount  Transactions  Introduced 79 

Liabilities  in  the  Opening  Entry  Explained 81 

An  Exercise  on  Opening  Entries 82 

Partnerships 83 

The  Sales  Book  or  Sales  Journal 83 

Set  VI.     Partnerships.  —  Equal  Profit  and  Loss 84 

The  Sales  Book  Illustrated 85 

Statements 88 

Exercises  for  Practice  in  making  Statements 88 

Set  VII.     Partnerships  —  Profits  and  Losses  in  Proportion  to  Invest- 
ment         92 

Commercial  Paper 95 

Outline 95 


Contents  xi 

PAGE 

Definitions  and  Explanations 9(3 

Drafts 96 

Indorsements 100 

Sj)ecial  Models  for  Journalizing  Drafts 102 

Letters  of  Credit  and  Money  Orders 103 

Set  VIII.     Draft  Transactions  Introduced 103 

Set  IX.     Collection  and  Exchange  Transactions  Introduced         .         .  106 

Single  Entry 110 

The  Day-book 110 

The  Cash-book 110 

The  Single  Entry  Day-book  Illustrated Ill 

The  Single  Entry  Cash-book  Illustrated 112 

The  Ledger .        .         .  113 

Statement 113 

Changing  from  Single  to  Double  Entry 114 

Set  X   A.     Exercises  in  changing  from  Single  to  Double  Entry   .         .  114 

Set  X   B.     Exercises  in  changing  from  Single  to  Double  Entry    .         .  116 

Practical  Exercises 119 

Business  Forms 126 

Ledger  Space 134 

Characteristics  of  Each  Set 138 

Index  and  Glossary 139 


EDITOR'S  INTRODUCTION 

The  little  book  now  published  represents  some  ten  years  of 
experiment  and  writing  on  the  part  of  the  author,  and  during 
the  last  two  years  it  has  been  passed  upon  by  those  represent- 
ing various  points  of  view  in  education  and  practical  affairs. 
Repeated  readings  and  criticisms  have  led  to  elimination  and 
simplification  until  the  work  is  now  in  size  only  a  small  part 
of  the  original  manuscript.  The  aim  has  been  to  give  in  the 
briefest  space  an  explanation  of  the  principles  and  practices  of 
account  keeping.  The  work  is  published  in  the  hope  that  it 
will  be  found  direct  and  straightforward  in  style,  that  it  is 
well  adapted  to  a  didactic  method  of  presentation,  and  that 
it  is  in  accord  with  current  business  usages  and  terminology. 

Bookkeeping  is  after  all  systematized  common  sense;  in  short, 
bookkeeping  is  an  adaptation  of  means  to  ends,  these  ends 
being  a  knowledge  of  one's  personal  affairs  or  of  the  condition 
of  a  business.  Business  men  do  not  want  a  know-it-all  book- 
keeper, trained  for  a  particular  system.  Methods  should 
change  as  there  are  changes  in  the  information  to  be  recorded 
and  the  ends  to  be  served.  There  are  certain  fundamentals 
of  accounts  in  which  all  who  have  to  do  with  them  should 
be  trained;  in  the  application  of  these  there  may  be  wide 
divergences.  It  is  well  to  keep  always  in  mind  that  book- 
keeping is  to  serve  business  and  not  business  to  serve 
bookkeeping. 

In  establishing  the  meaning  and  use  of  the  books  of  original 
entry,  many  experienced  teachers  and  expert  accountants  recom- 


xiv  Editor's   Introduction 

mend  a  limited  use  of  the  old-time  day-book  or  blotter.  The 
present  text  makes  possible  the  use  or  the  omission  of  the  day- 
book as  the  teacher  may  wish.  Journalizing  must  be  recog- 
nized as  a  valuable  exercise  in  fixing  the  principles  of  accounts 
and  in  teaching  the  fundamentals  of  debit  and  credit.  The 
two  books  just  mentioned  may  be  combined  in  the  journal- 
day-book,  which  should  be  introduced  early  in  the  learner's 
experience.  As  soon  as  the  fundamental  processes  are  under- 
stood, the  work  may  be  much  shortened  by  introducing  the 
cash-book,  sales  book,  and  the  invoice  book.  But  to  make  cer- 
tain that  the  use  of  these  books  be  intelligible,  it  is  recom- 
mended that  earlier  work  be  done  in  other  books. 

This  work  makes  a  departure  in  omitting  the  balance  sheet 
with  its  confusing  array  of  columns.  Instead  there  is  a  state- 
ment sheet  of  the  sort  used  in  practice.  Wide  inquiry  shows 
that  almost  never  is  the  conventional  six-column  balance  sheet 
of  the  text-books  used  even  by  experts,  and  the  average  book- 
keeper is  as  little  likely  to  be  asked  to  make  up  such  a  sheet 
as  he  is  to  be  asked  to  fly.  For  these  reasons  it  has  not  seemed 
necessary  to  perplex  learners  with  this  sheet. 

The  preliminary  course  which  this  book  furnishes  would 
scarcely  be  complete  without  a  discussion  of  both  double  and 
single  entry,  and  a  description  of  the  methods  of  changing  from  / 
one  to  the  other.  This  book  will  lend  itself  to  approaching 
bookkeeping  through  single  entry  if  that  is  desired.  The 
Practical  Exercises  at  the  close  of  the  book  cannot  fail  to  be 
of  much  interest  as  well  as  of  great  practical  value.  These 
exercises  show  a  simple  but  satisfactory  method  of  keeping 
accounts  in  everyday  affairs,  and  the  book  is  properly  brought 
to  a  conclusion  with  them. 

In  one  particular  at  least  this  book  will  be  found  a  radical 
departure  from  similar  texts  now  available ;  this  is  in  the  sub- 
stitution of  short  exercises  for  the  long  involved  sets.     Our 


Editor's  Introduction  xv 

bookkeeping  manuals  have  been  an  outgrowth  of  the  private 
commercial  school.  In  private  commercial  schools  students  are 
expected  to  specialize  on  bookkeeping  and  to  give  more  hours 
a  day  to  it  than  is  possible  for  them  to  give  in  the  public  high 
schools  and  similar  institutions.  With  the  long  involved  sets 
there  is  danger  of  students  with  limited  time  becoming  so 
confused  with  the  details  that  they  lose  sight  of  the  point 
which  the  details  are  to  illustrate.  The  present  book  gives 
a  minimum  of  subject-matter  for  each  point,  so  that  in  a 
given  class  hour  an  exercise  may  be  completed  and  a  definite 
result  reached.  Similarly  an  exercise  may  be  assigned  for 
home  work,  so  that  an  end  can  be  attained  in  this  subject 
without  this  subject  robbing  the  student  of  time  which  should 
be  given  to  other  work  of  the  school.  The  exercises  are  so 
arranged,  however,  that  the}^  may  be  grouped  into  longer  sets 
if  that  is  desired. 

This  is  essentially  a  first  book ;  it  is  not  designed  to  teach 
"  business  practice  "  or  to  be  a  substitute  for  actual  experience. 
We  can  still  tie  to  the  words  of  that  veteran  commercial 
teacher,  S.  S.  Packard,  "No  self-respecting  business  college  or 
teacher  of  commercial  studies  pretends  to  give  the  student 
business  experience.  As  every  one  knows,  this  must  result 
from  contact  with  men  and  real  transactions."^  We  may  have 
temporary  delusions,  but  ultimately  we  shall  accept  Mr.  Pack- 
ard's criticism  of  the  "  learning  to  do  by  doing  "  and  "  actual 
business  from  the  start "  follies.  This  book  accepts  as  funda- 
mental that  the  first  step  in  bookkeeping  is  to  hnow  how^  and 
it  also  premises  that  the  most  expeditious  way  to  learn  how  is 
by  a  direct  didactic  method.  The  office  practice  work  in  com- 
mercial schools  may  well  follow  such  a  book  as  this ;  it  does 
not  properly  seem  a  part  of  such  a  book. 

To  handle  this  text  with  the  best  results,  it  is  advised  that  • 
1  Packard,  Theory  and  Practice  of  Teaching  Accounts^  pp.  12,  13. 


xvi  Editor's   Introduction 

the  teacher  first  work  over  the  preliminary  matter,  beginning 
with  the  preface.  This  can  be  done  in  a  few  hours,  and  will 
furnish  an  understanding  of  the  aims,  plans,  and  possibilities 
of  the  book.  It  is  clearly  better  to  use  short  sets  until  the 
student  understands  well  the  mechanical  processes  of  posting 
and  closing  the  ledger;  practice  in  longer  sets  may  be  given 
later.  The  material  of  this  book  is  so  arranged  that  it  is  pos- 
sible to  use  it  either  way.  Each  set  is  divided  into  several 
exercises,  and  each  of  these  exercises  may  be  written  as  a 
distinct  set.  It  is  also  practicable  to  combine  two  or  more  of 
the  exercises  when  it  is  desired  to  have  longer  sets.  The 
manner  of  continuing  the  exercises  is  explained  on  pages  17 
and  46. 

A  student  who  has  followed  the  teaching  of  this  book 
should  be  able  to  perform  the  fundamental  operations  of 
bookkeeping  correctly  and  without  hesitation.  He  should 
have  the  ability  to  journalize;  to  use  cash-book,  sales  book, 
invoice  book ;  to  post,  close,  and  reopen  the  ledger ;  to  con- 
tinue work  in  the  same  ledger  after  it  has  been  closed  and 
reopened;  to  prepare  trial  balances  and  statements;  to  write 
bills,  notes,  drafts,  etc. ;  and  to  do  these  things  after  approved 
forms.  The  above  is  merely  suggestive.  The  resourceful 
teacher  will  devise  many  other  ways  in  which  the  exercises 
and  subject-matter  of  this  book  may  be  used. 

No  class  in  the  community  should  consider  itself  freed 
from  the  necessity  of  keeping  accounts.  To  no  other  per- 
sons is  there  greater  necessity  for  bookkeeping  than  to  wage- 
earners  and  small  producers.  Records  will  detect  losses  and 
fortify  against  extravagances.  If  adverse  conditions  exist, 
accounts  properly  kept  show  this  while  the  conditiorfs  may 
be  remedied.  Small  is  the  comfort  after  one  has  suffered 
•  loss  to  have  the  history  of  that  loss.  What  he  should  have 
is  a  record  that  will  show  the  loss  while  it  is  taking  place. 


Editor's  Intkoduction  xvii 

for  from  such  knowledge  the  conditions  may  be  so  modified 
as  to  prevent  the  loss.  In  the  management  of  his  own  affairs 
every  one  is  in  business,  and  every  one  should  have  a  proper 
record  of  income  and  expenditure.  It  is  not  unusual  to 
hnd  that  business  men  are  not  only  incapable  of  making  a 
statement  of  their  own  affairs,  but  sometimes  they  are  unable 
to  comprehend  a  proper  statement  when  it  has  been  prepared 
by  another.  It  is  hardly  necessary  to  say  that  such  men  are 
in  constant  danger  of  a  business  catastrophe.  In  some  parts 
of  the  world  failure  to  keep  proper  books  of  accounts  is  a 
dereliction  punishable  by  fine  and  imprisonment  if  one  fails 
in  business. 

If  not  statutory  requirement,  certainly  self-interest  should 
demand  a  more  general  knowledge  of  bookkeeping.  Recently 
the  students  of  a  well-known  theological  seminary  have  been 
required,  and  very  properly,  to  study  bookkeeping.  The 
executive  officer  of  the  seminary  accounts  for  the  innovation 
by  the  fact  that  the  students  would  in  their  future  callings 
have  the  care  of  the  money  of  others.  Often,  he  said,  gradu- 
ates of  the  seminary  were  complained  of  because  of  the  crude 
and  unsatisfactory  records  they  kept  of  funds  collected  and 
disbursed,  and  circumstances  had  arisen  where  ministers  with 
the  best  intentions  came  under  suspicion  because  of  inability 
to  keep  accounts.  It  is  not  too  much  to  say  that  some  knowl- 
edge of  accounts  should  be  part  of  the  education  of  every  one, 
from  the  woman  managing  the  home  to  the  representatives  of 
the  liberal  professions.  Applied  mathematics  in  the  form  of 
as  much  bookkeeping  as  is  furnished  in  this  work  might  well 
become  a  part  of  a  general  education  in  all  our  schools,  and  if 
some  of  the  time  formerly  given  to  grammar  school  arithmetic 
were  spent  upon  the  kind  of  mathematics  here  recommended, 
it  would  be  a  gain  to  mathematics  as  well  as  a  preparation  for 
the  latei'  life  of  the  students. 


xviii  Editor's   Intkoduction 

Just  as  this  book  goes  to  press  a  magazine  article  appears 

under  the  felicitous  title,  The  Bookkeeper  as  a  Human  Being. ^ 

More  than  any  other  phrase  this  expresses  the  thought  which 

underlies  Mr.  Bogle's  book.     He  has  regarded  the  bookkeeping 

teacher  as  a  rational  being,  and  has  furnished  a  text  which  can 

be  variously  adapted.     How  wdde  is  the  difference  between  the 

methods  he  proposes  and  the  old  devices  of  a  book  which  asks 

a  teacher  to  reduce  everything  to  the  dead  level  of  uniformity 

and  to  hold  a  key  with  which  all  results  are  to  be  measured ! 

A  live  book  will  make  possible  live  methods,  and  these  only 

can  give  really  live  bookkeepers. 

C.  A.  H. 
Jdne  1,  1905. 

1  World's  Work,  June,  1905. 


COMPEEHENSIVE    BOOKKEEPINa 


COMPREHENSIVE    BOOKKEEPII^a 

A   FIRST   BOOK 

PRELIMINARY  DEFINITIONS  ^ 

Bookkeeping  is  a  systematic  record  of  business  transactions  from 
which  the  condition  of  a  business  may  be  determined  at  any  time. 
Or  bookkeeping  may  be  defined  as  a  record  of  monetary  rights  and 
obligations,  of  operating  expenses,  and  of  returns  from  business 
transactions. 

There  are  two  methods  of  bookkeeping,  single  entry  and  double 
entry.  In  single  entry^  ledger  accounts  are  kept  only  with  persons. 
In  double  entry^  ledger  accounts  are  kept  with  things,  such  as  cash, 
merchandise,  notes,  interest,  etc.,  as  well  as  with  persons.  The  dis- 
tinguishing feature  between  single  and  double  entry  is  this  :  in  single 
entry  but  one  entry,  as  a  rule,  is  made  in  the  ledger  for  each  trans- 
action, this  being  a  debit  or  a  credit ;  in  double  entry  at  least  two 
entries  are  made  in  the  ledger  for  each  business  transaction,  these 
being  a  debit  and  an  equal  credit. 

There  are  two  classes  of  books  used  in  bookkeeping,  principal  and 
auxiliary.  A  prijicipal  hook  is  one  from  which  or  to  which  posting  is 
done.  An  auxiliary  hook  is  one  not  used  in  posting.  Such  a  book 
is  kept,  not  as  an  essential  part  of  the  books  of  the  business,  but  for 
systematically  recording  the  details  pertaining  to  some  item  or  items, 
that  are  not  systematically  recorded,  in  the  principal  books.  The 
same  book  may  be  a  principal  book  as  used  by  one  concern  and  an 
auxiliary  book  as  used  by  another. 

The  day-hook  is  a  book  of  original  entry  in  which  transactions  are 
recorded  in  the  order  of  their  occurrence.     Entries  in  this  book  should 

1  These  definitions  are  grouped  here  for  convenience  of  reference.  They  may  be 
committed  to  memory  either  in  this  connection  or  as  they  are  needed  in  the  progress 
of  the  work. 


2  -•  .^.         .Cp.MPiiEfiENSiVE  Bookkeeping 

be  concis,e^  and  yel.full  ejioOgh  to  leave  no  doubt  as  to  the  nature 
of  the^'  tran'saetiOi^^.  t  ;».:.'*.*-  • 

The  journal  is  a  book  in  which  the  items  of  a  transaction  are 
classified  preparatory  to  transferring  them  to  the  ledger. 

The  casli-hooh  is  the  book  which  contains  a  record  of  the  casli 
received  and  paid  out. 

The  ledger  is  the  book  of  accounts. 

The  sales  hook  is  a  book  in  which  sales  of  merchandise  are 
recorded. 

The  purchase  or  invoice  hook  is  a  book  in  which  purchases  of  mer- 
chandise are  recorded. 

Tlie  hill-hook  is  a  book  in  which  is  kept  a  record  of  notes  and  time 
drafts. 

An  item  is  a  separate  particular  in  a  transaction  or  in  an  account. 

An  account  is  a  systematic  arrangement  of  all  the  debit  and  credit 
items  of  a  series  of  transactions  with  the  same  person  or  pertaining 
to  the  same  thing.  Accounts  may  be  classified  as  personal,  property, 
use  and  service,  and  profit  and  loss. 

Remarks.  The  terms  used  here  in  the  classification  of  accounts,  and  also  in  the 
"tabular  view  of  bookkeeping"  on  page  4,  were  selected  because  they  best  suit  the  plan 
of  the  author  in  developing  the  rules  for  journalizing.  The  rules  in  this  text-book  rest  in 
part  upon  this  classification.  Considered  independently  of  these  rules  for  journalizing, 
other  terms  for  this  classification  are  just  as  desirable  and  are  preferred  by  some. 

Among  the  various  other  terms  used  by  different  authors  and  accountants  in  the  classi- 
fication of  accounts  are  the  following :  personal,  property,  allowance  ;  personal,  property, 
auxiliary  ;  personal,  real,  imaginary  ;  personal,  real,  nominal. 

From  another  point  of  view,  accounts  may  be  classified  as  non-speculative  and  specu- 
lative. Non-speculative  accounts  are  those  with  persons,  and  with  those  items  on  which 
there  is  no  increase  or  decrease  of  value,  unless  it  arises  incidentally  ;  as,  cash,  bills 
receivable,  and  bills  payable.  Speculative  accounts  are  accounts  with  those  items  on 
which  there  may  be  an  increase  or  a  decrease  of  value  ;  as,  merchandise,  real  estate, 
interest,  etc. 

Again,  another  twofold  classification  may  be  made,  one  including  all  accounts  that 
show  an  asset  or  a  liability,  the  other  including  all  accounts  that  show  a  profit  or  a  loss. 

These  latter  features  are  indicated  in  the  ' '  tabular  view  "  on  page  4  under  characteristics. 

Personal  accounts  are  accounts  with  individual  persons,  firms,  or 
corporation  s. 

Property  accounts  are  accounts  with  things  of  value  and  representa- 
tives of  value  ;  as,  merchandise,  real  estate,  cash,  notes,  etc. 

Use  and  service  accounts  are  accounts  with  the  uses  and  the  services 
given  or  received  by  the  business. 


Preliminary  Definitions  3 

The  profit  and  loss  account  is  the  account  in  which  the  profits  and 
the  losses  of  the  business  are  collected. 

The  cash  account  is  the  account  with  money,  checks,  money  orders, 
sight  drafts,  etc.,  or  anything  that  can  be  converted  into  money  on 
demand. 

The  Mils  receivable  account  is  the  account  with  notes  and  accepted 
time  drafts  made  payable  to  a  person,  firm,  or  corporation,  etc. 

The  hills  payable  account  is  the  account  with  notes  issued  by  a  person, 
firm,  or  corporation,  etc.,  and  time  drafts  which  have  been  accepted. 

The  merchandise  account  is  the  account  with  the  various  articles  in 
which  the  firm  deals.  '        . 

The  real  estate  account  is  the  account  with  houses,  lots,  land,  etc. 

Journalizing  is  the  classifying  of  the  items  of  a  transaction  with 
respect  to  debits  and  credits. 

Posting  is  the  process  of  transferring  the  debits  and  the  credits 
to  the  ledger  or  other  principal  book. 

A  loss  is  the  excess  of  th|^cost  over  the  selling  price,  or  a  decrease 
in  value.  It  includes  also  all  outlays  incidental  to  the  conducting  of 
a  business. 

A  2)rofi.t^  or  a  gain^  is  the  excess  of  the  selling  price  over  the  cost,  or 
an  increase  in  value.     It  includes  also  any  returns  for  services  rendered. 

Assets  or  resources  include  everything  belonging  to  a  person,  such 
as  merchandise,  real  estate,  cash,  notes,  and  sums  due  him. 

Liabilities  or  debts  include  everything  that  a  person  or  concern  owes 
to  others  on  notes,  on  account,  or  otherwise ;  or  they  include  the  mone- 
tary obligations  to  others. 

The  present  worth  of  a  person  is  what  he  is  actually  worth  at  the 
time  in  question.  It  may  be  found  in  two  ways:  1.  By  subtracting 
the  liabilities  from  the  assets.  2.  By  adding  the  net  profit  to  the 
worth  at  the  beginning  of  the  business,  or  by  subtracting  the  net  loss 
from  the  worth  at  that  time. 

Insolvency  is  the  condition  in  which  liabilities  exceed  assets. 

An  inventory  is  a  list  of  articles  on  hand  at  a  given  time  with  their 
respective  values  computed,  usually,  at  the  cost  price. 

Interest  is  the  use  of  money,  and  is  paid  for  after  the  money  is 
used. 

Discount  is  the  use  of  money,  and  is  paid  for  before  the  money  is 
used. 


Comprehensive  Bookkeeping 


A  TABULAR   VIEW   OF   BOOKKEEPING 


1^   Definition 
2^  Methods 

12   Single  entry 
22   Double  entry 
31  Books 

12   Principal  (usually) 
1^   Day-book 
2 3   Journal 
33   Cash-book 
43   Sales  book 
53   Purchase  book 
6^   Ledger 
22   Auxiliary  (usually) 
18   Bill-book 
2  8   Shipping  book 
33   Receipt  book 
48   Bank  book 
53   Check  book 
6  3   Expense  book,  etc. 
41  Accounts 

12   Personal  —  Characteristics 
1^   Non-speculative 
2  8   Do  not  fluctuate  in  value 
38   Show  assets  or  liabilities 
22   Property 

1^   Non-speculative 
1*   List 
15   Cash 

2^   Bills  receivable 
3^   Bills  payable 
2*    Characteristics 

1^   Do  not  fluctuate 

in  value 
2  5   Show  assets  or  lia- 
bilities 
2  3   Speculative 


2  3   Speculative  —  Continued 
14   List 

1^   Merchandise 
2  5   Real  estate 
35   Stocks 
45   Bonds 
55    Shipments 
6 5   Live  stock,  etc. 
2*   Characteristics 

1^   Fluctuate  in  value 
2 5   May  have  inventories 
35   Show  profits  or  losses 
32   Use  and  service  (or  allowance, 
auxiliary,  nominal,  etc.) 
13   List 

1*   Expense 

2*   Furniture  and  fixtures 
3*   Interest 
4*   Discount 
54   Collection 
6*   Exchange 
74   Storage 
8 4   Commission 
9*   Advertising 
104   Salary 
114   Labor 
124   Freight 
134   Express 
144   Rent 
154   Taxes 

164   Benevolence,  etc. 
2^   Characteristics 

14   Fluctuate  in  value 
24   May  have  inventories 
34   Show  profits  or  losses 
42    Profit  and  loss 


Development  of  Bookkeeping  5 

DEVELOPMENT   OF  BOOKKEEPING 

THE  FUNDAMENTAL  PRINCIPLE  OF  DOUBLE  ENTRY  BOOKKEEPING 

In  developing  the  subject  for  the  learner,  either  of  two  methods 
may  be  followed :  one  is  to  consider  first  the  whole  account  as  the  focal 
idea  and  to  lead  from  that  to  the  individual  transaction  and  the  classifi- 
cation of  its  items ;  the  other  is  to  consider  first  the  individual  trans- 
action, to  classify  its  items,  and  finally,  from  the  different  transactions, 
to  collect  into  the  account  all  items  pertaining  to  the  same  person  or 
the  same  thing.  The  latter  method  is  the  one  followed  in  this  text- 
book. To  approach  the  subject  intelligently  from  this  side,  let  us 
inquire  into  the  nature  of  a  business  transaction,  and  also  into  the 
methods  of  making  a  record  of  it. 

It  is  quite  likely  that  in  the  earlier  development  of  the  art,  much 
passed  for  bookkeeping  in  which  the  recording  was  not  very  system- 
atically done ;  and,  indeed,  in  some  quarters,  this  may  be  true  at  the 
present  time,  but  it  is  to  the  systematic  record  that  we  are  to  give  our 
attention. 

In  primitive  communities,  even  though  there  is  no  money  as  a 
measure  of  value  or  a  medium  of  exchange,  exchanges  are  nevertheless 
made,  one  article  being  given  for  another  that  is  considered  equal  to 
it  in  worth.  This  is  known,  not  as  buying  and  selling,  but  as  barter. 
But  this  fact  should  be  noticed :  the  thing  received  and  the  thing 
given  are  considered  equal.  This  idea  of  the  equality  of  the  ex- 
changes becomes  more  apparent,  however,  with  the  introduction  of 
some  article,  as  money,  as  a  common  measure  of  value. 

Again,  when  transactions  were  few  and  both  articles  were  delivered 
at  the  same  time  no  record  was  necessary.  But  as  trading  increased 
one  sometimes  received  an  article  with  the  understanding  that  some- 
thing of  an  equal  value  was  to  be  returned  at  a  future  time.  Now, 
when  these  transactions  became  frequent  a  record  became  necessary. 
Probably  at  first  the  records  were  kept  only  with  persons,  showing 
how  much  was  due  from  others  to  the  person  keeping  the  record  or 
how  much  that  person  owed  to  others.  To  give  such  information  but 
one  record  was  necessary  for  each  transaction,  that  one  being  with  a 
person.  Based  on  the  fact  of  this  one  entry,  such  a  method  is  known, 
at  the  present  time,  as  single  entry  bookkeeping. 


Q  Comprehensive  Bookkeeping 

In  course  of  time  there  was  developed  a  plan  of  keeping  records, 
not  only  with  the  persons  with  whom  one  had  business  dealings,  but 
also  with  the  things  in  which  he  dealt.  This  required  two  records  for 
each  transaction,  one  with  the  person  and  one  with  the  thing;  or, 
if  one  article  was  exchanged  for  another,  both  records  would  be  with 
things.  Keeping  prominently  in  mind  the  equality  of  exchanges 
which  is  found  in  every  business  transaction,  the  two  records  just 
mentioned  could  be  set  one  against  the  other  as  a  check  on  the 
accuracy  of  the  records.  Based  on  the  fact  of  this  double  entry  and 
the  equal  value  of  the  two  items,  such  a  method  of  making  the  records 
is  known  as  double  entry  bookkeeping.  Preliminary  to  making  this 
record  with  each  of  the  items  involved,  each  transaction  was  analyzed 
and  its  items  classified  by  a  system  of  debits  and  credits,  each  being 
equal  to  the  other. 

Based  on  the  foregoing  considerations,  we  may  formulate,  then, 
as  the 

Fundamental  principle  of  double  entry  hookheepiyig :  Every  debit  has 
an  equal  credit. 

RULES    FOR    JOURNALIZING 

Journalizing  is  the  classifying  of  the  items  of  a  transaction  with 
respect  to  debits  and  credits.  '  Rules  for  journalizing  are  statements 
which  aid  in  classifying  the  items  with  respect  to  debits  and  credits 
as  established  by  business  custom.  Tlie  classification  as  far  as  per- 
sons are  concerned  is  based  upon  the  definitions  of  debtor  and  creditor. 
But  the  bookkeeper  wishes  to  keep  a  record  with  various  other  items, 
such  as  cash,  merchandise,  notes,  interest,  etc.  Hence  he  classifies 
these  in  such  a  way  as  to  be  consistent  with  the  definitions  of  debtor 
and  creditor  as  they  apply  to  persons  and  also  with  the  fundamental 
principle  that  every  debit  has  an  equal  credit.  This  principle,  too, 
as  has  already  been  seen,  is  consistent  with  the  nature  of  a  business 
transaction ;  for  in  every  transaction  there  is  an  equal  exchange,  or 
for  everything  that  a  business  receives  something  equal  to  it  is  given 
up.  For  example,  if  merchandise  is  sold  for  cash,  the  business  has 
received  the  cash  for  its  equal,  the  merchandise  that  has  been  given  up. 
Again,  if  merchandise  is  sold  and  a  note  is  taken  for  it,  the  business 
has  received  the  note  (a  written  promise  to  pay  the  cash)  for  the  mer- 


Rules  for  Journalizing  7 

chandise  that  has  been  given  up.  Still  again,  merchandise  may  be 
sold  to  a  person  and  he  may  give  his  oral  promise  for  it.  In  this  case, 
the  business  has  received  his  oral  promise  for  the  merchandise  that 
has  been  given  up. 

A  record  of  the  oral  promises  is  kept  by  using  the  name  of  the 
person  who  gives  the  oral  promise  to  the  business,  or  the  name  of 
the  person  to  whom  the  business  gives  its  oral  promise.  This  promise 
may  be  only  an  implied  one  ;  as  when  a  person  makes  a  purchase  and 
leaves  the  place  of  business  without  having  said  anything  about  a  settle- 
ment. Custom  allows  this  when  the  persons  are  acquainted,  and  makes 
the  purchaser  just  as  responsible  as  though  he  had  formally  given 
his  promise  in  words.  The  record  of  such  a  transaction  is  kep*^  the 
same  as  is  that  of  an  oral  promise.  Oral  and  implied  promises  are 
indicated  in  business  by  the  expression  "on  account." 

The  foregoing  considerations  will  enable  the  student  to  understand 
the  more  formal  statement  of  the  principles  governing  the  classification 
of  the  items  of  a  transaction. 

1.  By  definition  a  debtor  is  one  who  owes,  and  by  definition  debit- 
ing is  the  act  of  indicating  this  condition ;  hence,  if  a  person  owes  a 
business  on  account,  that  is,  if  the  business  has  received  his  oral  or 
implied  promise,  the  person  is  debited ;  or  Ave  may  say  the  promise  is 
debited,  indicating  wiiose  promise  it  is  by  using  the  name  of  the  person 
giving  it. 

2.  By  definition  a  creditor  is  one  who  is  owed,  and  by  definition 
crediting  is  the  act  of  indicating  this  condition;  hence,  if  a  business 
owes  a  person  on  account,  that  is,  if  the  business  has  given  its  oral  or 
implied  promise,  the  person  is  credited;  or  we  may  say  the  promise 
is  credited,  using  the  name  of  the  person  to  indicate  to  whom  it  is 
given. 

3.  Since,  by  the  second  principle,  a  person  is  credited  when  the 
business  gives  its  oral  promise,  it  follows  that  if  this  promise  is 
given  for  property  which  the  business  has  received,  property  is  debited 
in  accordance  with  the  principle  of  equal  debits  and  credits. 

4.  Since  debit  and  credit  express  opposite  conditions,  to  be  consist- 
ent with  the  third  principle,  property/  is  credited  when  the  business 
gives  it  up.  This  can  be  shown  also  from  the  first  principle  and  the 
principle  of  equal  debits  and  credits. 

5.  Since,  by  the  fourth  principle,  property  is  credited  when  the 

or  TH  = 


/^: 


8 


Comprehensive  Bookkeeping 


business  gives  it  up,  if  it  is  given  up  for  a  use  or  service  which  the 
business  has  received,  it  follows  that  the  use  or  service  is  debited. 

6.  Hence,  from  the  fifth  principle,  it  follows  that  use  or  service  is 
credited  when  the  business  gives  it. 

The  foregoing  may  be  more  briefly  stated  as  follows : 


1.  Debit 

2.  Credit 

3.  Debit 

4.  Credit 

5.  Debit 

6.  Credit 


the  oral  or  implied  promise 
(using  name  of  person) 

when  the  business 


property    when    the    business 


use  or  service  when  the  business 


'receives  it. 

gives  it. 
receives  it. 

[  gives  it. 
'  receives  it. 

gives  it. 


The  above  statements  may  be  summarized  in  the  following 
General  Rule  for  Journalizing: 


Debit 


Credit 


all   that   the  business 


receives. 


gives  up. 


The  student  should  master  this  general  rule  and  the  explanations 
leading  up  to  it.  Then  if  he  will  note  its  application  to  a  few  simple 
transactions,  it  is  believed  that  he  will  not  have  difficulty  in  journaliz- 
ing ordinary  transactions. 

If  the  student  is  called  upon  to  journalize  transactions  that  involve 
items  that  are  new  to  him,  this  consideration  may  be  helpful :  classify 
the  items  that  are  already  familiar ;  then,  remembering  that  the  funda- 
mental principle  of  equal  debits  and  credits  is  always  to  hold,  place  the 
new  item  so  as  to  make  the  debits  equal  the  credits. 

As  transactions  involving  new  items  are  introduced,  the  application 
of  the  rule  to  them  will  be  noted. 


INTRODUCTORY   SETS 

The  aim  in  these  introductory  sets  is  (1)  to  familiarize  the  student 
with  the  rule  for  journalizing  as  it  is  applied  to  simple  transactions, 
(2)  to  acquaint  him  with  the  process  of  posting,  and  (3)  to  explain  the 
manner  of  balancing  and  re-opening  ledger  accounts. 

To  illustrate  these  points,  let  us  give  our  attention  to  the  following: 

EXERCISE    FOR    ILLUSTRATION 

Jan.  1.  Bought  merchandise  of  B.  F.  Butler  on  account,  $800. 

2.  Sold  merchandise  to  J.  W.  Brown  on  account,  1240. 

3.  Sold  merchandise  to  B.  C.  Wylie  for  cash,  il'90. 

4.  Bought  merchandise  of  B.  F.  Butler  on  account,  1295. 

5.  Sold  merchandise  to  J.  W.  Brown  on  account,  |125. 

6.  Sold  merchandise  to  J.  H.  Dawson  for  cash,  1234. 

8.  Paid  B.  F.  Butler  cash  on  account,  $320. 

9.  Sold  merchandise  to  J.  W.  Brown  on  account,  $168. 

10.  Sold  merchandise  for  cash,  $94. 

11.  Received  cash  of  J.  W.  Brown  on  account,  $275. 
14.    Bought  merchandise  of  A.  K.  Lowry  for  cash,  $325. 
Merchandise  inventory,  $460. 

Suggestion.  It  will  aid  the  student  in  fixing  these  fundamental 
processes  in  mind,  if  he  will  write  this  exercise  in  his  own  books,  step 
by  step,  immediately  after  the  explanation  of  each  point  is  read. 
Merely  copying  the  illustrations  on  pages  11  and  14,  however,  will  not 
have  any  great  value. 

Let  us  apply  to  these  transactions  the  general  rule  for  journalizing 
(page  8)  to  determine  which  items  are  to  be  debited  and  which 
credited. 

Jan.  1.  In  this  transaction  evidently  the  business  has  received  mer- 
chandise. Hence  by  the  rule  merchandise  should  be  debited.  The 
expression  "  on  account "  indicates  an  oral  or  implied  promise.     In  this 

9 


10  Comprehensive  Bookkeeping 

case  the  business  has  given  the  promise  to  B.  F.  Butler.  Hence,  by 
the  rule,  the  promise  is  credited.  This  is  indicated  by  using  B.  F. 
Butler's  name.  To  make  the  journal  show  these  facts,  proceed  as  fol- 
lows: place  the  date,  January  i,  190-^  on  the  blue  line  that  you  find  at 
the  head  of  the  page  of  your  blanlv  book.  Then  write  the  word  Mer- 
ehandise  on  the  first  ruled  line  at  the  extreme  left  of  the  wide  column, 
and  on  the  same  line,  in  the  left-hand  money  column,  place  the  amount, 
$800.  Write  B.  F.  Butler's  name  on  the  next  line,  commencing  about 
the  middle  of  the  wide  column.  Place  the  amount  of  the  transaction, 
$800^  on  the  same  line,  but  in  the  right-hand  money  column.  (If 
your  blanks  have  a  vertical  line  dividing  the  wide  column,  commence 
Butler's  name  just  at  the  right  of  this  line.)  Notice  the  arrangement 
of  the  record  of  this  transaction  in  the  journal  on  page  11. 

Remarks.  1.  Some  write  7>>\,  the  abbreviation  for  debtor,  after  Merchandise,  and  Cr., 
the  abbreviation  for  credit  or  creditor,  after  B.  F.  Butler's  name.  This  is  not  necessary, 
but  may  be  done,  if  it  is  desired.  It  is  the  rule  to  place  the  debit  items  at  the  left  and  the 
credit  items  at  the  right,  and  the  debit  amounts  in  the  left-hand  money  column  and  the 
credit  amounts  in  the  right-hand  money  column.  Hence  the  position  indicates  v^hich 
items  are  debited  and  which  are  credited. 

2.  When  an  amount  consists  only  of  dollars,  the  manner  of  recording  it  in  the  books 
is  not  uniform.  Some  leave  the  column  for  cents  blank  ;  others  insert  ciphers  in  this 
column  ;  and  others  still  put  a  dash  in  the  column  for  cents.  The  first  method  has  the  ad- 
vantage of  saving  time  ;  the  second  and  the  third  have  the  advantage  of  showing  that  there 
has  been  no  oversight,  and  also  make  it  more  difficult  to  change  the  amount  afterward  by 
inserting  figures  in  the  column  for  cents. 

In  this  text-book,  when  an  amount  consists  only  of  dollars  the  column  for  cents,  in 
most  cases,  has  been  left  blank. 

Jan.  2.  The  expression  "  on  account "  in  this  transaction  indicates 
that  the  business  has  received  J.  W.  Brown's  oral  or  implied  promise  ; 
hence  this  promise  (using  Brown's  name)  is  debited.  The  business 
has  given  up  merchandise  ;  hence  merchandise  is  credited.  This  is 
to  be  arranged  as  shown  in  the  journal  on  page  11.  Notice  that  its 
date  figure,  ^,  is  to  be  placed  on  the  first  line  below  the  preceding 
entry  and  in  the  middle  of  the  wide  space,  or  just  at  the  right  of 
the  vertical  line,  if  there  is  one.  Then  J.  W.  Brown  and  Merchandise 
follow  on  xhe  next  two  lines.  It  is  not  necessary  to  repeat  the  name 
of  the  same  month  with  the  date  until  commencing  a  new  page. 
Then  the  month  with  the  day  and  year  should  be  placed  on  the  blue 
line  at  the  head  of  the  page  as  explained  under  January  1. 

Jan.  3.     In  this  transaction  the  business  has  received  cash  :  there- 


Exercise  for  Illustration 


11 


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12  Comprehensive  Bookkeeping 

fore  cash  is  debited.  And  merchandise  has  been  given  up;  there- 
fore merchandise  is  credited.  This  is  to  be  arranged  as  shown  in  the 
journal  on  page  11. 

Jan.  4.     Same  as  the  1st. 

Jan.  5.     Same  as  the  2nd. 

Jan.  6.     Same  as  the  3rd. 

Jan.  8.  In  this  case  the  business  has  given  up  cash  ;  therefore 
cash  is  credited.  And  the  business  has  received  back  a  part  of  its 
promise  given  to  B.  F.  Butler  on  January  1 ;  therefore  the  promise 
(using  Butler's  name)  is  debited. 

Jan.  9  and  10  are  the  same  as  the  2nd  and  the  3rd  respectively. 

Jan.  11.  Cash  is  received  in  this  case,  and  therefore  cash  is  debited. 
The  business  returns  J.  W.  Brown's  promise  received  at  a  previous 
time ;  therefore  the  promise  is  credited  by  using  J.  W.  Brown's  name. 

Jan.  14.  Merchandise  is  debited,  because  it  is  received.  Cash  is 
given  up,  and  therefore  it  is  credited. 

Ruling.  It  will  be  good  drill  for  the  student  to  rule  under  each  transaction  ;  but 
this  may  be  omitted  at  the  discretion  of  the  teacher.  If  the  ruling  is  done,  it  should  be 
exactly  upon  the  blue  line  ;  and  it  and  all  other  ruling  should  be  done  with  red  ink, 
unless  it  has  been  decided  to  discard  red  ink.  The  ruling  of  the  journal  on  page  25 
may  be  used  as  a  model  for  this  work.     For  a  journal  without  this  ruling,  see  page  11. 

Remark.  Some  place  the  word  To  before  the  credits  in  the  journal.  In  reading  the 
journal  entry  it  is  convenient  to  use  it.  The  bookkeeper  would  read  the  entry  under 
January  1,  thus  :  "  Merchandise  debtor  to  B.  F.  Butler,  §800,"  or  "  Merchandise  to  B.  F. 
Butler,  |800." 


THE   LEDGER   ACCOUNTS 

After  the  preceding  exercise  has  been  journalized,  the  items  pertain- 
ing to  the  same  person  or  thing  are  to  be  collected  in  the  ledger  under 
a  single  title.  [In  the  ledger,  the  left-hand  half  of  the  page  is  used 
for  the  debits  of  the  account  and  the  right-hand  half  for  the  credits.] 
Proceed  as  follows  :  upon  the  blue  line  at  the  head  of  the  first  blank 
page  in  the  ledger  write  the  name  of  some  account  found  in  the 
journal ;  as,  Merchandise,  The  first  item  in  the  journal  is  a  debit  for 
merchandise.  This  entry,  then,  will  be  placed  upon  the  left-hand  half 
of  the  page.  After  writing  the  year,  190-,  at  the  head  of  the  date 
column,  just  above  the  head  line  (or  just  below  the  head  line  as 
vsome  do),  write  the  abbreviation,  Jan.,  in  the  month  column  on  the 


Balancing  the  Accounts  13 

first  ruled  line,  and  the  day  of  the  month,  i,  in  the  next  column. 
In  the  journal-page  column,  put  the  page  of  the  journal,  -Z,  upon 
which  the  transaction  is  journalized  ;  and  finally  put  the  amount, 
$800^  in  the  money  column.  Immediately  after  this  has  been  placed 
in  the  ledger  account,  insert  the  page  of  the  ledger,  i,  upon  which 
it  has  been  placed,  in  the  narrow  column  at  the  left  of  the  word 
Merchandise  in  the  journal.  This  shows  that  this  item  has  been 
transferred  and  where  it  may  be  found  in  the  ledger.  Notice  the 
arrangement  of  this  in  the  illustration. 

The  next  item  in  the  journal  is  a  credit  for  B.  F.  Butler.  Write 
his  name  a  few  lines  below  Merchandise,  This  being  a  credit,  it  is 
placed  on  the  right-hand  half  of  the  page  on  the  first  blue  line  under 
the  title  in  a  manner  similar  to  the  one  employed  in  recording  the 
debit  of  merchandise.  Be  sure  to  check  it  in  the  journal  as  soon 
as  the  entry  is  made  in  the  ledger  account,     (pp.  11  and  14.) 

The  next  item  in  the  journal  is  a  debit  for  J.  \V.  Brown.  Open 
an  account  with  him  a  few  lines  below  the  last  account,  and  make 
the  record  on  the  debit  side  of  his  account  in  a  manner  similar  to 
that  followed  in  the  account  with  B.  F.  Butler. 

The  next  item  in  order  is  merchandise.  This  being  a  credit,  it 
must  be  placed  upon  the  right-hand  half  of  the  page  under  its  ledger 
title.  It  is  placed  on  the  first  ruled  line  as  shown,  and  checked  in 
the  journal. 

Proceed  in  the  same  manner  until  all  the  items  have  been  trans- 
ferred from  the  journal  to  their  proper  ledger  accounts. 

BALANCING   THE   ACCOUNTS 

Let  us  give  our  attention  to  B.  F.  Butler's  account.  Add  each  side  of 
the  account  and  find  the  difference,  which  is  f  775.  Upon  the  smaller  side 
of  the  account,  which  in  this  case  is  the  debit,  write  the  day  of  the  month 
in  the  date  column,  the  word  Balance  in  the  wide  column  (item  column 
it  is  called),  and  the  difference,  $775^  in  the  mon^y  column,  all  in  red 
ink.^  Then  rule  a  single  red  line  across  each  money  column,  placing 
them  exactly  upon  the  same  blue  line.  Do  not  extend  these  lines  across 
the  check  columns.  Below  these  place  the  footings,  $1095.  The  debit 
and  credit  footings  should  always  be  upon  the  same  line.-     (This  may 

1  See  "  Observations  "  on  page  36. 


14 

Comprehensive 

Bookkeeping 

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Balancing  the  Accounts  15 

be  better  understood  by  noticing  the  account  with  J.  W.  Brown  or 
that  with  cash.)  Below  the  footings  rule  double  red  lines  across  all 
the  narrow  columns,  placing  the  upper  one  of  the  two  lines  exactly 
upon  the  blue  line.^  This  account  is  now  balanced.  To  re-open  it 
proceed  as  follows:  transfer  the  balance  to  the  opposite  side  of  the 
account,  writing  it  in  black  ink  below  the  rulings.  J.  W.  Brown's 
account  and  the   cash  account  are    to    be   treated  in  the   same  way. 

In  balancing  an  account  use  the  date  upon  which  it  is  balanced.  In 
re-opening  the  account  use  the  date  of  the  next  business  day,  unless 
further  posting  to  the  account  is  to  be  done  on  the  day  of  balancing  it. 
In  that  case  use  the  same  date  for  re-opening  as  for  balancing. 

The  credit  side  of  B.  F.  Butler's  account  being  the  larger;  the 
balance,  1775,  shows  the  amount  we  owe  him.  The  debit  side  of  J. 
W.  Brown's  account  being  the  larger,  the  balance,  §258,  shows  the 
amount  he  owes  us.  In  the  account  with  cash,  the  balance,  |148,  shows 
the  amount  on  hand. 

The  debit  side  of  the  account  with  merchandise  shows  how  much 
the  merchandise  has  cost  us,  and  the  credit  side  shows  how  much  it 
has  produced  for  us.  Hence  if  all  has  been  sold  the  difference 
between  the  two  sides  will  *be  the  amount  gained  or  lost  on  mer- 
chandise, —  a  profit  or  gain,  if  the  credit  side  is  the  larger,  and  a  loss, 
if  the  debit  side  is  the  larger.  If  there  is  any  merchandise  remain- 
ing unsold,  it  must  be  added  to  the  credit  side  before  the  difference 
is  taken.  In  the  present  case  there  is  $460  worth  unsold.  This 
is  determined  in  business  by  making  a  list  of  all  the  goods  on  hand, 
usually  at  the  cost  price.  This  is  called  "taking  an  inventory." 
Hence  to  balance  the  merchandise  account,  first  put  on  the  credit  side 
the  date,  14^  the  word  Inventory  in  the  item  colum.n,  and  the  amount, 
$460,  in  the  money  column,  all  in  red  ink.  Then  find  the  difference 
between  the  two  sides,  which  is  $91.  The  credit  side  being  the  larger, 
this  difference  is  a  profit.  Place  on  the  debit  side,  then,  it  being  the 
smaller  in  this  case,  the  date,  14,  and  for  explanation  the  word  Profit 
and  the  amount,  $91,  all  in  red  ink.  Then  foot  the  two  sides,  which 
now  balance,  and  rule  the  account  as  in  the  other  cases.  Finally,  to  re- 
open the  account  transfer  the  inventory  to  the  opposite  side  of  the 
account,  writing  it  below  the  rulings  in  black  ink.  The  inventory  shows 
the  amount  of  merchandise  on  hand  at  the  time  of  balancing  the  account. 
1  Some  prefer  ruling  the  double  red  lines  in  the  middle  of  the  next  space. 


16 


Comprehensive  Bookkeeping 


Nothing  more  is  to  be  done  with  the  profit  for  the  present.     In  the 
complete  sets  it  will  have  further  consideration. 

Below  is  given  a  cash  account  twice  balanced  to  show  how  accounts 
will  appear  when  repeatedly  balanced  and  re-opened. 


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SET  A.    TRANSACTIONS   CONTAINING  PERSONAL,   CASH, 
AND    MERCHANDISE    ITEMS 


Suggestion.  The  student  may  journalize  the  first'  three  or  four 
of  the  following  exercises  as  distinct  sets,  and  transfer  them  to  the 
proper  ledger  accounts,  and  balance  and  re-open  the  ledger  accounts 
as  explained  and  illustrated  on  the  preceding  pages.  Then  the  last 
two  or  three  may  be  grouped.  When  the  first  exercise  of  this  group 
has  been  journalized,  transfer  the  items  to  the  proper  ledger  accounts, 
checking  them  in  the  journal  as  already  described.  Then  balance 
and  rule  each  account,  and  bring  the  balances  and  the  inventory  below 
the  rulings.  Next  journalize  the  second  exercise  of  the  group,  and 
transfer  its  items  to  the  same  ledger  accounts,  and  balance  them  as 


Personal,  Cash,  and  Merchandise  Items  17 

before.     And  so  proceed  until  all  the  exercises  have  been  journalized 
and  transferred  to  the  ledger. 

When  each  exercise  is  written  as  a  distinct  set,  journalize,  as  a 
part  of  the  exercise,  the  memorandum  in  parenthesis,  which  is  found  in 
each  exercise  after  the  first ;  but  when  two  or  more  exercises  are 
grouped  as  one,  omit,  in  journalizing,  all  those  in  parentheses  after  the 
first  one  of  the  group.  To  illustrate  this  latter  staternen%^ suppose 
Exercises  4,  5,  and  6  are  to  be  written  as  one  set.  Journalize  the 
transaction  of  February  1,  but  omit  those  of  the  11th  ^nd  the  20th. 

Ledger  Space.  It  will  be  necessary  for  the  teacher  to  decide  how  many  and  which 
exercises  of  a  set  are  to  be  written.  Then  the  ledger  space  required  for  each  account  may 
be  determined  by  consulting  the  table  on  pages  134  to  137.  In  business  the  ledger  spaca 
should  be  estimated  from  the  probable  number  of  entries  in  the  account. 

Exercise  1 
January,  190-. 

1.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1800. 

2.  Sold  merchandise  to  J.  A.  Adams  on  account,  $460. 

3.  Sold  merchandise  for  cash,  $425. 

4.  Bought  merchandise  of  B.  C.  Wallace  on  account,  $970. 

5.  Sold  merchandise  for  cash,  $300. 

6.  Sold  merchandise  to  J.  A.  Adams  on  account,  $520. 
8.  Paid  Cook  &  Co.  cash  on  account,  $760. 

8.  Sold  merchandise  for  cash,  $290. 

9.  Keceived  cash  of  J.  A.  Adams  on  account,  $780. 
10.    Sold  merchandise  to  L.  W.  Baxter  on  account,  $65. 
Merchandise  inventory,  $970. 

Exercise  2 

^1.  bought  merchandise  of  B.  C.  AVallace  on  account,  $970.) 
,-y42.    Sold  merchandise  for  cash,  $345. 

13.   Sold  merchandise  to  L.  W.  Baxter  on  account,  $285. 

15.  Paid  B.  C.  Wallace. cash  on  account,  $260. 

16.  Sold  merchandise  for  cash,  $425, 

17.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1260. 

18.  Sold  merchandise  to  J.  A.  Adams  on  account,  $185. 

19.  Received  cash  of  L.  W.  Baxter  on  account,  $240. 

20.  Paid  B.  C.  Wallace  cash  on  account,  $415. 
20.   Received  cash  of  J.  A.  Adams  on  account,  $90. 
Merchandise  inventory,  $1860.         v 

Exercise  3 

(22.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1860.)   "^ 

23.  Sold  merchandise  to  J.  A.  Adams  on  account,  $795. 

24.  Sold  merchandise  for  cash,  $675. 

25.  Bought  merchandise  for  cash,  $160. 


■r 


18  COMPKEHENSIVE   BOOKKEEPING 

January,  190-. 

26.  Received  cash  of  J.  A.  Adams  on  account,  $523. 

27.  Paid  Cook  &  Co.  cash  on  account,  $340. 
29.    Sold  merchandise  for  cash,  $78, 

29.  Bought  merchandise  of  B.  C.  Wallace  on  account,  $500. 

30.  Sold  merchandise  to  L.  W.  Baxter  on  account,  $165. 

31.  Received  cash  of  J.  A.  Adams  on  account,  $40. 
31.    Sold  merchandise  for  cash,  $54. 
Merchandise  inventory,  $1275. 

Exercise  4 
February,  190- 

(1.    Bought  merchandise  of  B.  C.  Wallace  on  account,  $1275.) 

2.  Sold  merchandise  for  cash,  $220. 

3.  Sold  merchandise  to  J.  A.  Adams  on  account,  $367. 

4.  Paid  B.  C.  Wallace  cash  on  account,  $200. 

5.  Sold  merchandise  for  cash,  $90. 

5.  Bought  merchandise  of  Cook  &  Co.  on  account,  $400. 

6.  Received  cash  of  J.  A.  Adams  on  account,  $300. 

8.  Paid  B,  C.  Wallace  cash  on  account,  $270. 

9.  Sold  merchandise  to  L.  W.  Baxter  on  account,  $50. 
9.    Sold  merchandise  to  J.  A.  Adams  on  account,  $26. 

10.   Bought  merchandise  for  cash,  $30. 
Merchandise  inventory,  $1240. 

Exercise  5 


(11.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1240.) 

12.  Bought  merchandise  of  B.  C.  Wall^^on  account,  $2725. 

12.  Sold  merchandise  for  cash,  $690.  ^B 

13.  Sold  merchandise  to  L.  W.  Baxter  on  account,  $380. 
13.  Paid  Cook  &  Co.  cash  on  account,  $200. 

15.  Sold  merchandise  to  J.  A.  Adams  on  account,  $575. 

16.  Sold  merchandise  for  cash,  $80. 

17.  Received  cash  of  J.  A.  Adams  on  account,  $300. 

18.  Paid  Cook  &  Co.  cash  on  account,  $150. 

19.  Sold  merchandise  for  cash,  $960. 
Merchandise  inventory,  $1400. 

Exercise  6 

(20.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1400.) 

22.  Sold  merchandise  for  cash,  $960. 

23.  Sold  merchandise  to  A.  R.  Houston  on  account,  $800. 

24.  Bought  merchandise  of  Cook  &  Co.  on  account,  $1600. 

25.  Sold  merchandise  to  L.  W.  Baxter  on  account,  $470. 

25.  Paid  Cook  &  Co.  cash  on  account,  $890. 

26.  Received  cash  of  A.  R.  Houston  on  account,  $750. 

26.  Sold  merchandise  to  L.  W.  Baxter  on  account,  $385. 

27.  Sold  merchandise  for  cash,  $525. 

27.  Received  cash  of  A.  R.  Houston  on  account,  $40. 
Merchandise  inventory,  $500. 


Personal,  Cash,  and  Merchandise  Items  19 

SET  B.     TRANSACTIONS  CONTAINING  PERSONAL,  CASH, 
AND   MERCHANDISE   ITEMS 

The  treatment  of  this  set  is  similar  to  that  of  Set  A.  More  care,  however,  should  be 
exercised,  since  in  most  of  the  transactions  the  student  must  make  the  calculations  to 
obtain  the  amounts. 

EXEKCISE    1 
January,  190-. 

1.  Bought  of  Wilson  &  Co.  on  account,  100  bbl.  flour  at  $5.25. 

2.  Bought  of  James  Clark  on  account,  80  bbl.  salt  at  $1.50. 

3.  Sold  J.  R.  Smith  on  account,  20  bbl.  flour  at  $6.25  ;  10  bbl.  salt  at  $2. 
•4.    Sold  E.  E.  Whiting  for  cash,  25  bbl.  flour  at  $6.25. 

•5.  Received  cash  of  J.  R.  Smith  on  account,  $100. 

6.  Sold  E.  S.  Hibbard  on  account,  15  bbl.  salt  at  $2. 

8.  Bought  of  James  Clark  on  account,  50  bbl.  salt  at  $1.50. 
«*   9.  Paid  Wilson  &  Co.  cash  to  apply  on  account,  $150. 

9.  Sold  R.  M.  Crawford  for  cash,  .30  bbl.  flour  at  $6.25  ;  25  bbl.  salt  at  $2. 
10.   Sold  E.  S.  Hibbard  on  account,  25  bbl.  flour  at  $6.25. 

rMerchandise  inventory,  $120!^ 

Exercise  2 

(11.  Bought  of  James  Clark  on  account,  80  bbl.  salt  at  $1.50.) 

12.  Bought  of  J.  R.  Buchanan  on  account,  140  bbl.  flour  at  $5 ;  100  bbl.  beef  at  $12.  "^ 

13.  Sold   E.   S.  Hibbard  on  account,  50  bbl.  salt  at   $2.25;   30  bbl.  flour  at  $6.50,-v/ 
J,  25  bbl.  beef  at  $14. 

"^  15.   Sold  A.  S.  Ely  for  cash,  20  bbl.  salt  at  $2.25  ;  10  bbl.  beef  at  $14.  i' 
16.   Paid  James  Clark  cash  to  apply  on  account,  $100.  '^ 

16.  Sold  J.  R.  Smith  on  account,  10  bbl.  salt  at  $2  ;   15  bbl.  flour  at  $6.25.  ^ 

17.  Received  cash  of  E.  S.  Hibbard  to  apply  on  account,  $350.  *' 

18.  Sold  B.  C.  Hastings  for  cash,  50  bbl.  flour  at  $6.75.  i^ 

19.  Sold  J.  R.  Smith  on  account,  10  bbl.  flour  at  $6.50  ;  5  bbl.  beef  at  $15.  ^ 

20.  Received  cash  of  E.  S.  Hibb%rd  on  account,  $125. 
Merchandise  inventory,  $895. 

Exercise  3 

(22.  Bought  of  J.  R.  Buchanan  on  account,  35  bbl.  flour  at  $5  ;  60  bbl.  beef  at  $12.)- 

22.  Sold  A.  S.  Ely  for  cash,  25  bbl.  flour  at  $4.80  ;  40  bbl.  beef  at  $11. 

23.  Sold  E.  S.  Hibbard  on  account,  20  bbl.  beef  at  $10.50. 

24.  Bought  of  Stryker  Bros,  for  cash,  40  bbl.  salt  at  $1.40. 

25.  Bought  of  Wilson  &  Co.  on  account,  80  bbl.  pork  at  $12.50 ;  60  bbl.  salt  at  $1.40. 

26.  Received  cash  of  E.  S.  Hibbard  to  apply  on  account,  $175. 

27.  Sold  J.  R.  Smith  on  account,  10  bbl.  flour  at  $4.75 ;  15  bbl.  salt  at  $1.50. 

29.  Paid  J.  R.  Buchanan  cash  to  apply  on  account,  $400. 

30.  Sold  E.  S.  Hibbard  on  account,  '30  bbl.  pork  at  $12.25  ;  40  bbl.  salt  at  $1.50. 

31.  Received  cash  of  J.  R.  Smith  in  full  of  account. 
Merchandise  inventory,  $663. 

Exercise  4 

Eebruary,  190-. 

(1.   Bought  of  J.  R.  Buchanan  on  account,  45  bbl.  salt  at  $1.40;  50  bbl.  pork  at  $12.  ) 
2.  Bought  of  James  Clark  on  account,  50  bbl.  salt  at  $1.50;  80  bbl.  beef  at  $12  ; 
40  bbl.  pork  at  $11.50. 


20  Comprehensive  Bookkeeping 

February,  190-. 

3.  Sold  A.  S.  Ely  for  cash,  20  bbl.  salt  at  $1.60  ;  15  bbl.  beef  at  $14. 

5.  Sold  J.  R.  Smith  on  account,  25  bbl.  salt  at  $1.60 ;  30  bbl.  beef  at  $14 ;  10  bbl. 

pork  at  $12.50. 

6.  Paid  J.  R.  Buchanan  cash  on  account,  $50. 

7.  Sold  E.  S.  Hibbard  on  account,  10  bbl.  pork  at  $12.50. 

8.  Sold  B.  C.  Hastings  for  cash,  10  bbl.  beef  at  $14  ;  5  bbl.  salt  at  $1.60. 

8.  Received  cash  of  J.  R.  Smith  on  account,  $450. 

9.  Bought  of  Wilson  &  Co.  on  account,  75  bbl.  flour  at  $5.25. 

10.  Sold  Mills  Bros,  for  cash,  20  bbl.  flour  at  $6.50  ;  5  bbl.  salt  at  $1.60  ;  8  bbl.  beef 
at  $13.50  ;  5  bbl.  pork  at  $12.50. 

12.  Paid  James  Clark  cash  on  account,  $325. 

13.  Sold  S.  B.  Avery  for  cash,  '^0  bW^  flour  at  $6.50. 

l^  13.  Sold  J.  R.  Smith  on  account,  15  bbl.  flour  at  $6.25 ;  5  bbl.  pork  at  $13. 

14.  Received  cash  of  E.  S.  Hibbard  on  account,  $100. 

15.  Sold  A.  S.  Ely  for  cash,  40  bbl.  salt  at  $1.60  ;  2  bbl.  beef  at  $13.50. 
Merchandise  inventory,  $975. 

Exercise  5 

(16.  Bought  of  Wilson  &  Co.  on  account,  20  bbl.  flour  at  $5.25 ;  15  bbl.  beef  at  $12  ; 
60  bbl.  pork  at  $11.50.) 

16.  Sold  A.  S.  Ely  for  cash,  15  bbl.  beef  at  $12.50 ;   40  bbl.  pork  at  $12  ;   15  bbl. 

flour  at  $5.50. 

17.  Sold  J.  R.  Smith  on  account,  5  bbl.  flour  at  $5.25  ;  10  bbl.  pork  at  $12. 

19.  Bought  of  James  Clark  on  account,  100  bbl.  salt  at  $1.25  ;  80  bbl.  flour  at  $5.25. 

20.  Sold  J.  W.  Brown  for  cash,  30  bbl.  flour  at  $5.50;  25  bbl.  salt  at  $1.50. 

20.  Sold  E.  S.  Hibbard  on  account,  20  bbl.  flour  at  $5.50;  10  bbl.  pork  at  $11.50^ 

6  bbl.  salt  at  $1.50. 

21.  Received  cash  of  J.  R.  Smith  to  apply  on  account,  $125. 

22.  Sold  J.  P.  White  for  cash,  25  bbl.  flour  at  $5.50  ;  10  bbl.  salt  at  $1.50. 

23.  Bought  of  J.  R.  Buchanan  on  account,  80  bbl.  beef  at  $12 ;  75  bbl.  flour  at  $5  \ 

60  bbl.  pork  at  $10.50. 
23.  Sold  J.  W.  Brown  for  cash,  15  bbl.  beef  at  $12.50  ;  20  bbl.  flour  at  $5.50. 
26.  Sold  J.  R.  Smith  on  account,  20  bbl.  beef  at  $12.50. 

26.  Received  cash  of  E.  S.  Hibbard  on  account,  $200. 

27.  Paid  James  Clark  cash  on  account,  $125. 

28.  Sold  B.  C.  Hastings  for  cash,  45  bbl.  beef  at  $10.50;  60  bbl.  pork  at  $9.50: 

20  bbl.  salt  at  $1.40. 
28.  Paid  Wilson  &  Co.  cash  in  full  of  account. 
Merchandise  inventory :  60  bbl.  flour  at  $5.00,     $300 
40    "    salt     "    1.25,         50 
$350 


COMPLETE   SETS 

If  the  student  has  mastered  the  preceding,  he  is  now  ready  to 
write  his  sets  in  complete  form.  There  is  presented  on  the  follow- 
ing pages  for  his  guidance  a  set  completely  written  up  in  the  day- 
book, the  journal,  and  the  ledger.  The  ledger  is  properly  closed  and 
re-opened,  and  is  accompanied  with  the  customary  trial  balances. 

THE  DAY-BOOK 

As  already  stated,  the  day -hook  is  a  book  of  original  entry. 
Often  in  practice  the  journal-day-book,  sales  book,  purchase  or  invoice 
book,  etc.,  are  substituted  for  the  day-book.  The  entries  of  the  day- 
book should  be  concise,  and  yet  full  enough  to  leave  no  doubt  as  to 
the  nature  of  the  transactions.  In  the  following  memoranda  of  trans- 
actions, the  most  direct  form  of  statement  has  not  always  been  used,  so 
that  the  student  may  have  the  practice  of  deciding  upon  a  concise 
form. 

The  student  will  observe  that  the  first  date  should  be  placed  on 
the  blue  line  at  the  head  of  the  page  in  his  blank  book,  and  all  other 
dates  in  the  center  of  the  wide  column  on  the  -first  line  after  each 
transaction.  (Some  place  the  date  at  the  left  of  each  transaction, 
leaving  a  blank  line  between  each  two  transactions.  If  this  is  done, 
an  extra  column  will  be  needed  at  the  left  or  the  right  of  the  wide 
column  for  the  check  column.)  Begin  the  first  line  of  each  trans- 
action at  the  extreme  left  of  the  wide  column,  but  leave  a  narrow 
margin  between  the  items  and  this  edge.  If  a  transaction  involves 
but  one  item,  place  the  amount  only  in  the  right-hand  money  column^ 
as  on  January  2 ;  if  it  consists  of  more  than  one,  extend  the  amount 
of  each  to  the  left-hand  money  column,  and  the  total  to  the  right- 
hand  column.  If  you  are  at  a  loss  at  any  time  as  to  how  to  arrange 
any  transaction,  examine  the  day-book  which  follows.  You  may  find 
a  similar  transaction. 

21 


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Comprehensive  Bookkeeping 


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24     ^^  Comprehensive  Bookkeeping 

The  day-book  may  be  ruled  in  the  same  manner  as  explained  for 

the  journal. 

Note.     It  will  be  well  at  this  point  to  consult  ihe  paragraph  on  "  The  Journal-Day- 
Book,"  page  55. 

Use  of  Capitals.     In  this  text-book  when  the  names  of  articles  are  tabulated,  as  in 
the  day-book,  they  are  capitalized.     Usage  on  this  point,  however,  is  not  uniform. 


THE   JOURNAL 

The  next  step  in  order  is  to  journalize  the  transactions  of  the 
day-book.  The  journal  is  a  book  in  which  the  items  of  a  trans- 
action are  classified  preparatory  to  transferring  them  to  the  ledger. 

The  rule  for  journalizing  has  already  been  explained  as  far  as  it 
applies  to  simple  transactions.  Its  application  to  transactions  involv- 
ing new  items  will  be  explained  as  they  are  introduced.  Hence  the 
student  need  not  attempt  to  understand  at  this  time  the  journalizing 
of  notes  (bills  receivable  and  bills  payable),  interest,  etc.  Transac- 
tions involving  these  items  are  included  here  merely  to  avoid  the 
necessity  of  writing  up  new  sets  in  which  to  illustrate  them  when 
they  are  introduced. 

As  soon  as  a  transaction  has  been  journalized,  check  it  in  the 
day-book  either  by  a  check  mark,  thus  (y/),  as  is  shown  in  the  trans- 
actions of  January  1  and  2  on  page  22,  or  by  using  the  page  of  the 
journal  on  which  the  transaction  is  journalized,  as  is  shown  in  all 
the  transactions  after  January  2.  The  latter  method  is  to  be  pre- 
ferred. 

PROPRIETOR'S   ACCOUNT  EXPLAINED 

In  double  entry  it  is  necessary,  and  in  single  entry  it  is  usual, 
to  have  an  account  in  some  form  to  represent  the  proprietor.  By 
some  this  account  is  called  the  "  Capital "  account.  But  in  these  sets 
the  student  may  use  his  own  name  as  proprietor  when  no  other  one 
is  give^.  If  the  proprietor  begins  business  with  an  investment  of 
some  kind,  an  entry  is  necessary.  To  understand  how  the  rule  for 
journalizing  applies  to  this,  let  us  suppose  that  the  student  began 
by  putting-into  the  business  ilOOO  in  cash.  Think  of  it  in  this  way: 
the  business  has  received  $1000  in  cash;  hence  cash  should  be 
debited  according  to  the  rule.     The  business  has  given  its  promise 


A  Form  of  the  Journal 


25 


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The  Trial  Balance  27 

(implied)  to  the  student  for  the  $1000;  hence  the  promise  is  credited 
by  using  the  student's  name.  The  journal  entry  for  this  then  would 
appear  thus : 

Cash  1000.00 

Student  1000.00 

If  at  the  time  of  opening  a  set  of  books  there  are  both  assets 
and  liabilities,  the  journal  entry  may  be  made  in  either  of  two  ways : 
one  is  to  debit  the  assets  and  credit  the  liabilities  and  then  credit 
the  proprietor  for  the  difference,  or  the  net  investment.  This  plan 
is  illustrated  in  the  journal  entry  of  January  1  on  page  25.  The 
other  method  is  to  make  a  separate  entry  for  the  assets  and  for  the 
liabilities.  The  journal  entry  of  January  1,  if  treated  in  this  manner, 
would  be  as  follows: 

For  the  Assets  For  the  Liabilities 

Cash  2500.00  Student  700.00 

Mdse.  1450.00  Bills  Fay,  700.00 

Student  3950.00 

THE   LEDGER 

The  ledger  is  the  book  of  accounts. 

After  the  transactions  have  been  journalized,  the  items  are  to  be 
transferred  to  the  proper  accounts  in  the  ledger.  This  process  is  called 
posting.  The  manner  of  doing  this  has  been  explained  already.  It  is 
customary  to  reserve  the  first  place  in  the  ledger  for  the  proprietor's 
account. 

The  ledger  which  follows  contains  the  items  posted  from  the  pre- 
ceding journal.  It  contains  also  the  entries  which  belong  to  the  closing 
and  re-opening  of  the  ledger. 

THE   TRIAL  BALANCE 

The  object  of  the  trial  balance  is  to  determine  whether  the  ledger  is 
in  balance.  It  may  be  taken  at  such  times  as  the  proprietor  may 
desire.  Many  firms  take  a  trial  balance  each  month.  Banks  take  a 
trial  balance,  or  proof  of  their  books,  each  day.  It  is  a  precautionary 
step  before  closing  the  ledger.  It  should  be  taken  immediately  after 
the  posting  has  been  completed.  Proceed  as  follows  :  add  both  sides 
of  each  account  in  the  ledger,  and  place   the   sum,  in  small  figures, 


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^^7. 


Errors  and  Their  Detection 


31 


immediately  below  the  last  amount.  Use  a  sharp-pointed  lead  pencil 
for  this.  In  no  case  use  ink  for  these  footings.  [See  merchandise 
uccoiint,  page  28.]  After  all  the  accounts  have  been  added,  the  foot- 
ings are  to  be  arranged  in  the  trial  balance  as  exhibited  below.  (Or 
the  footings  of  each  account  may  be  transferred  to  the  trial  balance  as 
soon  as  they  are  obtained.)  If  the  sum  of  the  debit  footings  equals 
the  sum  of  the  credit  footings,  it  is  usually  taken  as  evidence  that  the 
ledger  is  in  balance.  Accounts  which  balance  may  be  omitted  from 
the  trial  balance. 

It  will  be  noted  that  the  bills  payable  account  was  balanced  before 
January  31 ;  hence  in  that  case  the  amount  below  the  rulings  is  used. 


<^.2^^^^^-^^^^t^O^E^^^?2>^2^'^:^<^ 


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OR.  FOOTINGS      CR.  FOOTINGS 


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ERRORS  AND  THEIR  DETECTION 


If  the  sum  of  the  debit  and  the  credit  footings  of  the  trial  balance 
agree,  it  is  fair  evidence  that  the  ledger  is  in  balance  ;  but  it  does  not 
prove  the  correctness  of  all  the  preceding  work.  Errors  may  have 
been  made  in  the  day-book  in  the  computations,  or  an  amount  may 
have  been  posted  to  the  wrong  account.  Neither  of  these  would  affect 
the  equality  of  the  debits  and  the  credits.  If,  on  the  other  hand,  the 
debit  and  the  credit  footings  of  the  trial  balance  do  not  agree,  it  is  good 
evidence  that  one  or  more  errors  exist  somewhere. 


32  Comprehensive  Bookkeeping 

The  following  suggestions  may  be  of  use  in  helping  to  locate 
errors ; 

1.  If  the  difference  of  the  footings  of  the  trial  balance  is  in  round 
numbers,  as  1  cent,  10  cents,  $1,  flO,  etc.,  the  error  may  be  in  addition 
or  subtraction. 

2.  Some  amount  may  have  been  omitted  in  posting ;  hence  look 
through  the  journal  for  an  amount  equal  to  the  difference  of  the 
footings. 

3.  If  the  difference  of  the  footings  is  divisible  by  2,  the  error  may 
have  been  caused  by  posting  an  amount  equal  to  half  the  difference  to 
the  wrong  side  of  some  account.  Look  for  such  an  amount  in  the 
journal. 

4.  If  the  difference  is  divisible  by  9,  the  error  may  have  been 
caused  by  transposing  the  figures  in  some  amount. 

5.  If  the  error  still  exists,  carefully  review  the  posting,  checking 
with  a  lead  pencil  each  amount  in  the  journal  as  well  as  the  corre- 
sponding amount  in  the  ledger.  If  the  error  has  not  been  located  by 
the  time  all  the  posting  has  been  reviewed,  look  through  the  ledger  to 
see  whether  one  or  more  amounts  are  unchecked.  If  so,  they  probably 
have  been  posted  twice. 

As  a  precaution  against  the  trouble  of  locating  errors  use  the 
utmost  care  in  all  the  work. 


CLOSING    THE    LEDGERS 

The  expression,  "  closing  the  ledger,"  is  more  technical  than  explana- 
tory. The  ledger  may  be  closed  at  such  times  as  the  proprietor  may 
desire,  but  usually  it  is  done  once  a  year. 

Preliminary  Remarks.  The  accounts  in  the  ledger  may  be 
divided  into  two  classes  : 

1.  Those  that  show  either  an  asset  or  a  liability. 

2.  Those  that  show  either  a  profit  or  a  loss. 

(The  accounts  belonging  in  these  two  classes  are  indicated  in  the 
"tabular  view  of  bookkeeping"  on  page  4  under  characteristics.^ 

1  Some  prefer  closing  the  ledger  by  means  of  a  journal  entry  instead  of  by  the  method 
here  explained  ;  but  this  being  a  first  book,  it  is  not  thought  best  to  explain  in  detail  more 
than  the  one  method. 


Closing  the  Ledger  33 

It  will  be  helpful  to  note  which  sides  of  the  accounts  show  these 
facts.  In  personal  accounts  the  debit  side  shows  how  much  is  due, 
and  the  credit  side  how  much  is  owed.  Therefore,  if  the  debit  side  of 
a  personal  account  is  in  excess,  the  difference  is  an  asset ;  but  if  the 
credit  side  is  in  excess,  the  difference  is  a  liability. 

In  the  cash  account  the  debit  side  shows  how  much  cash  has  been 
received,  and  the  credit  side  how  much  has  been  paid  out.  In  this 
account  the  debit  side  will  be  the  larger  if  there  is  any  difference,  as 
it  is  not  possible  to  pay  out  more  cash  than  has  been  received.  This 
difference  is  the  amount  on  hand  and  is,  therefore,  an  asset. 

In  the  merchandise  account  the  debit  side  shows  how  much  the 
merchandise  has  cost,  and  the  credit  side  how  much  it  has  produced. 
If  all  has  been  sold  and  the  debit  side  is  in  excess,  the  difference  is  a 
loss  ;  but  if  the  credit  side  is  in  excess,  the  difference  is  a  profit.  If 
there  is  any  merchandise  unsold,  the  value  of  it  must  be  subtracted  from 
the  debit  side  or  added  to  the  credit  side  before  the  difference  is  taken. 
The  former  is  the  theoretical  method,  but  the  latter  is  the  more  con- 
venient and  is  the  one  used  in  business. 

In  the  expense  account  are  entered  those  items  of  outlay  incidental 
to  the  conducting  of  the  business.  These  are  losses  and  occur  on  the 
debit  side  of  the  account. 

In  the  interest  account  are  entered  the  sums  paid  for  the  use  of 
money  borrowed  and  the  sums  received  for  the  use  of  money  lent. 
Sums  paid  for  the  use  of  money  are  losses,  and  the  sums  received  are 
profits.  Later  we  shall  learn  that  interest  is  debited  when  we  pay  for 
the  use  of  money,  and  credited  when  we  receive  pay  for  the  use  of 
money.  Hence,  if  the  debit  side  of  this  account  is  in  excess,  the  differ- 
ence is  a  loss  ;  but  if  the  credit  side  is  in  excess,  the  difference  is  a 
profit. 

If  new  accounts,  as  they  are  introduced,  are  examined  in  a  manner 
similar  to  the  foregoing,  it  will  be  found  that  for  all  accounts  the  fol- 
lowing statements  are  true  : 

1.  If  the  debit  side  of  an  account,  is  in  excess,  the  difference  is  an 
asset  if  the  account  belongs  to  the  asset  and  liability  class,  but  a  loss  if 
it  belongs  to  the  profit  and  loss  class. 

2.  If  the  credit  side  of  an  account  is  in  excess,  the  difference  is  a 
liability  if  the  account  belongs  to  the  asset  and  liability  class,  but  a 
profit  if  it  belongs  to  the  profit  and  loss  class. 


34  Comprehensive  Bookkeeping 

Only  such  of  these  statements  as  relate  to  the  profit  and  loss 
accounts  are  immediately  needed,  but  the  others  are  best  con- 
sidered with  them  and  will  be  useful  later  in  connection  with  the 
making  of  statements  of  assets  and  liabilities,  and  of  profits  and 
losses,  pages  88  to  91. 

Object  of  Closing  the  Ledger.  The  object  of  closing  the  ledger  is  to 
cause  the  proprietor's  account  to  show,  in  a  single  amount,  the  present 
worth.  To  cause  it  to  do  this,  it  is  not  necessary  to  disturb  any 
accounts  except  those  that  show  profits  or  losses,  and  the  proprietor's. 
This  cannot  be  too  strongly  urged,  for  the  student  is  liable  to  receive 
the  impression  that  it  is  necessary  to  balance  all  the  accounts  when  the 
ledger  is  closed. 

Explanation  of  Process.  (The  student  will  be  aided  in  understand- 
ing this  process  by  copying  in  his  book  the  preceding  ledger  up  to  the 
point  at  which  it  is  ready  for  closing,  and  then  performing  the  work  of 
closing,  step  by  step,  in  connection  with  the  explanations.) 

In  the  illustrative  ledger  on  pages  28-30  the  only  accounts  showing 
profits  or  losses  are  those  with  merchandise,  expense,  and  interest.  To 
close  the  ledger,  then,  proceed  as  follows  :  open  a  profit  and  loss  account 
in  the  ledger.  This  is  an  account  into  which  the  profits  and  the  losses 
are  collected  from  the  different  accounts  showing  them.  The  merchan- 
dise account  being  the  first  in  our  ledger  that  shows  a  profit  or  a  loss, 
we  give  our  attention  to  it  first.  There  is  §1765  worth  of  merchandise 
unsold.  Enter  this  as  follows  ;  on  the  first  blank  line  on  the  credit  side 
of  the  account  write  first  the  date,  5i,  then  in  the  wide  column,  the 
word  Inventory,  and  in  the  money  column  the  amount,  ^1765,  all  in  red 
ink.  Then  find  the  difference  between  the  debit  and  the  credit  sides  of 
the  account,  which  is  $247.  The  credit  side  being  the  larger,  this  is  a 
profit.  Enter  this  on  the  first  blank  line  on  the  smaller  side  of  the  ac- 
count, the  debit  in  this  case,  putting  first  the  day  of  the  month,  5i,  then 
for  explanation  Profit,  and  finally,  in  the  money  column,  the  amount, 
§247,  all  in  red  ink.  Now,  foot  up  and  rule  the  account  as  shown. 
Then  transfer  the  inventory  to  the  opposite  side  of  the  account,  writing 
the  date,  the  explanation,  and  the  amount  in  black  ink  below  the 
rulings.  Next  turn  to  the  profit  and  loss  account  and  enter  the  profit, 
$247,  on  the  credit  side.  Write  the  date,  Jan.  31,  and  in  the  wide 
column.  Merchandise  (the  name  of  the  account  from  which  it  comes). 


Closing  the  Ledger  35 

in  the  page  column  the  page  of  the  ledger  from  which  brought,  and 
finally  the  amount,  $247^  all  in  black  ink.  Immediately  after  doing 
this  insert  in  the  page  column  of  the  merchandise  account  on  the  same 
line  with  the  word  Profit^  the  page  of  the  ledger  upon  which  the  profit 
and  loss  account  is  found.  This  shows  that  the  profit  from  merchan- 
dise has  been  transferred. 

The  next  account  showing  a  profit  or  a  loss  is  that  with  expense. 
There  remains  unpaid  rent,  |40.  Since  this  is  a  liability,  it  will  in- 
crease the  loss  as  shown  by  this  account ;  hence  enter  it  on  the  debit 
side,  in  red  ink,  using  for  explanation  Unpaid  Rent.  Inventory 
could  be  used,  but  Unpaid  Rent  better  explains  its  nature.  Then 
find  the  difference  between  the  two  sides,  $95.20,  and  enter  it,  in  red 
ink,  upon  the  smaller  side  (the  credit),  using  for  explanation  Loss, 
Foot  up  and  rule  the  account.  Transfer  the  unpaid  rent  to  the  oppo- 
site, or  credit,  side  of  the  account  below  the  rulings.  Then  transfer 
the  loss  to  the  debit  side  of  the  profit  and  loss  account,  using  for 
explanation  Expense,  the  name  of  the  account  from  which  it  is  brought. 
Insert  the  ledger  pages  in  both  accounts  as  instructed  in  the  case  of 
the  merchandise  account. 

The  next  account  is  that  with  interest.  There  is  no  inventory 
in  this  case,  hence  find  the  difference  between  the  two  sides,  $25.98, 
which  will  be  a  loss,  as  the  debit  side  is  the  larger.  Enter  this  upon 
the  smaller  side  (the  credit),  in  red  ink,  using  for  explanation  Loss. 
Foot  up  and  rule  the  account.  Then  transfer  this  amount  to  the  debit 
side  of  the  profit  and  loss  account,  entering  it  in  black  ink  and  using 
for  explanation  Interest.     Insert  the  ledger  pages  as  before. 

All  the  profits  and  the  losses  have  now  been  collected  into  the  profit 
and  loss  account,  and  the  difference  between  the  two  sides  will  be  the 
net  profit  or  the  net  loss.  As  the  credit  side  is  the  larger,  it  will  be  a 
profit  of  $125.82.  Enter  this  amount  on  "the  smaller  side  (the  debit), 
in  red  ink,  using  for  explanation  Student's  Net  Profit.  Foot  up  and 
rule  the  account.  Transfer  tliis  net  profit  to  the  credit  side  of  student's 
account,  using  for  explanation  Net  Profit.  This  is  written  in  black 
ink.     Insert  the  ledger  pages  as  before. 

Tlie  difference  between  the  two  sides  of  the  student's  account  will 
now  show  his  present  worth.  Enter  this  amount,  $3375.82,  on  the 
smaller,  or  debit,  side  in  red  ink,  using  for  explanation  Present  Worth. 
Foot  up  and  rule  the  account.     As  the  student's  account  now  shows 


36  COMPKEHENSIVE   BOOKKEEPING 

the  present  worth,  our  object  has  been  accomplished.  Then  transfer 
the  present  worth  to  the  opposite  side  of  the  account,  in  black  ink, 
below  the  rulings,  and  the  ledger  is  in  proper  condition  to  continue 
the  record  of  the  business  for  the  next  period  of  time. 

Certain  other  accounts  in  this  illustrative  ledger  have  been  balanced, 
but  not  as  a  part  of  the  process  of  closing  the  ledger.  It  is  intended 
that  the  student  use  this  as  a  general  reference  set ;  hence  as  many 
different  things  as  possible  have  been  illustrated.  Other  accounts  may- 
be balanced  at  any  time  there  is  an  occasion  for  so  doing.  In  case  an 
account  balances  with  a  single  amount  on  each  side,  it  may  be  ruled  as 
illustrated  in  the  bills  receivable  account.  R.  S.  Brown's  account 
shows  how  to  treat  an  account  that  balances  with  more  than  one  entry 
on  one  or  both  sides.  The  bills  payable  account  and  the  account  with 
S.  E.  Avery  show  how  to  balance  and  re-open  an  account  when  the 
sides  are  unequal. 

Observations.  Every  time  a  red  ink  entry  is  placed  in  any  ledger 
account  it  is  transferred  to  the  opposite  side  of  the  same  or  of  some 
other  account  and  entered  in  black  ink.  Thus  the  ledger  is  constantly 
kept  in  balance. 

Some  do  not  use  red  ink  as  explained,  but  indicate  these  entries  by 
using  a  different  style  of  writing. 

THE    SECOND    TRIAL    BALANCE 

After  the  ledger  has  been  closed,  and  all  inventories,  etc.,  have  been 
brought  below  the  rulings,  it  is  advisable  to  take  a  second  trial  balance 
before  proceeding  with  the  subsequent  work,  to  see  that  no  errors  or 
omissions  have  been  made.  Such  a  trial  balance  of  the  ledger  as  it 
now  stands  is  here  presented.  It  includes  all  accounts  that  have  been 
re-opened  and  all  that  were  not  balanced.  From  each  account  that  has 
been  re-opened  the  amount  transferred  below  the  rulings  is  taken,  and 
from  the  accounts  that  were  not  balanced  the  debit  and  the  credit 
footings  are  taken. 

This  may  be  added  to  the  first  trial  balance  by  having  two  more 
money  columns  at  the  right,  and  placing  these  amounts  opposite  the 
names  of  their  respective  accounts. 

Some  prefer  to  assume  that  this  work  has  been  correctly  done  and 
not  to  take  a  trial  balance  until  the  next  regular  time  for  doing  so. 


The  Second  Trial  Balance 


37 


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Some  prefer  a  trial  balance  in  which  the  differences  of  the  debits 
and  the  credits  are  used  instead  of  the  footings.  If  this  plan  were 
followed  in  the  preceding  trial  balance,  it  would  appear  as  given  below. 
The  one  on  page  31  could  be  rendered  in  this  manner  also.  This  form 
is  convenient  when  all  the  accounts  in  the  ledger  are  to  be  balanced. 
It  can  then  be  followed  as  a  guide  in  balancing  every  account  except 
the  proprietor's  and  those  that  have  inventories. 


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38  Comprehensive  Bookkeeping 

CONDENSED    DIRECTIONS    FOR    WRITING    A    SET 

It  is  thought  that  the  explicit  directions  given  on  the  preceding 
pages  for  writing  a  set  will  make  the  process  plain  to  the  student. 
Nevertheless,  briefer  directions  may  be  of  advantage  to  him.  For  this 
purpose  there  is  given  here  the  following  condensed  directions  for 
writing  a  set: 

1.  Enter  transactions  in  the  day-book.     As  a  rule  each  transaction 

will  begin  with  Bought^  Sold,  Received,  or  Paid. 

2.  Journalize. 

3.  Post.     Notice  that  the  classified  items  do  not  change  sides.     (The 

student  may  be  less  likely  to  post  to  the  wrong  side  of  an  ac- 
count if  he  first  posts  all  the  debit  items,  and  then  posts  the 
credit  items.) 

4.  Take  trial  balance. 

5.  Make  statement.     (This  may  be  omitted,  or  made  after  closing  the 

ledger.) 

6.  Enter  inventories  in  proper  accounts  in  red  ink,  if  the  ledger  is  to 

be  closed.    [See  Merchandise  and  Expense,  pages  28  and  29.] 

7.  Close  the  ledger  : 

1.  Close  accounts  showing  profits  or  losses  into  the  profit  and 

loss  account.      [See  Merchandise,  Expense*  Interest,  pages 
28  and  29.] 

2.  Close  ,the   profit  and   loss  account  into  the  proprietor's  (or 

partners')  account.      [See  Profit  and  Loss,  page  30.] 

3.  Close   proprietor's   (or    partners')  account.      [See    Student's 

account,  page  28.] 

8.  Re-open  the  ledger,  if  work  is  to  be  continued  in  the  same  set  : 

1.  Transfer  the  inventories,  if  any,  to  the  opposite  side  of  the 

accounts,  writing  them  in  black  ink  below  the  rulings. 
[See  Merchandise,  Expense,  Interest,  pages  28  and  29.] 

2.  Transfer  the  present  worth  (or  insolvency)  in  the  proprietor's 

account  to  the  opposite  side  of  the  account,  writing  it  in 

black   ink   below   the   rulings.     [See   Student's  account, 

page  28.] 

Note.     Do  not  close  any  other  class  of  accounts  at  the  time  of  closing  the  ledger,  unless 

there  is  a  special  reason  for  doing  so.     They  may  be  closed  at  any  time  that  this  special 

reason  occurs,  as:  (1)  When  an  account  is  settled;  (2)  When  the  footings  become  very 


Closing  the  Ledger 


39 


large  ;  (3)  When  the  bottom  of  a  page  is  reached,  and  it  is  desired  to  transfer  the  balance 
to  a  new  page  ;  (4)  When  it  is  desired  to  transfer  the  balances  of  all  accounts  to  a  new 
ledger,  etc.  For  the  manner  of  closing  such  accounts,  see  Bills  Beceivable,  Bills  Payable, 
S.  E.  Avery,  and  R.  S.  Brown,  pages  29  and  30.  If  there  is  no  special  reason  for  closing 
an  account,  allow  it  to  remain  open  ;  as,  Cash,  J.  M.  Steele,  and  H.  E.  Henry,  pages  28-30. 

EXERCISES   IN    CLOSING   THE    LEDGER 

There  are  given  here  a  few  exercises  for  drill  in  closing  the  ledger, 
before  proceeding  with  the  next  set.  The  student  should  first  copy  in 
his  ledger  the  accounts  as  here  presented.  Then  he  should  close  the 
accounts  that  affect  the  present  worth,  following  the  directions  of  the 
seventh  step,  page  38,  and  consulting  the  models  of  the  preceding 
pages.  After  this  has  been  done  the  accounts  not  affecting  the  present 
worth  may  be  closed  so  as  to  leave  the  ledger  with  a  finished  appear- 
ance. If  the  student  is  at  a  loss  to  know  whether  any  particular 
account  belongs  to  the  profit  and  loss  group,  he  should  consult  the 
tabular  view  of  bookkeeping  on  page  4. 

EXERCISE  1 

In  this  exercise  use  an  inventory  of  $300  for  merchandise. 

1 

190- 


Jan.    1 

2860 

190- 


2 

190- 


Jan. 

1 

2860 

Jan. 

2 

1320 

16 

128 

90 

10 

H 

SO 

22 

49 

20 

20 

5 

12 

?n&v^A.ci/yidl9.& 


190- 

- 

190 

- 

Jan. 

2 

1320 

Jan. 

4 
15 

22 
25 

840 
125 

49 
87 

75 
20 
50 

40 


Comprehensive  Bookkeeping 


190- 


f.  ^.  ha^'yil'Sbarb 


190- 

- 

190 

- 

Jan. 

4 
25 

840 

87 

50 

Jan. 

16 

128 

90 

6 


Jan. 

15 

125  75 

6 


190- 

- 

<D^ 

(//(ItrbQ.^ 

■ 

Jan. 

10 
20 

5 

so 

12 

EXERCISE   2 
In  this  exercise  the  inventory  for  merchandise  may  be  $1200,  and  for  expense,  $275. 


^fiyiuitrbt 


190- 

- 

190' 

June 

1 

150 

June 

1 

1500 

l7{Ub@yfhCi7lcLl9^b 


190- 

- 

190 

- 

June 

1 
8 

1500 

822 

June 

3 
6 
12 

263 

84 
145 

88 
21 

3 


190' 

190- 

June 

3 
6 

12 

263 

84 
145 

1 

88 
21 

June 

5 
9 
15 
20 

25 

1220 
9.40 

275' 
100 

25 

Closing  the  Ledger 


41 


190- 


June 

1 

150 

\lv-tv  If  ^onitA 


190- 

- 

190 

- 

June 

20 

100 

June 

8 

322 

6 


190- 

- 

So(/Ja^b7l^t 

June 

5 
15 

25 

■ 

12 

275 
25 

20 

, 

190- 


J^tt&Vd^t 


June 

9 

9 

JfO 

EXEECISE   3 

In  this  exercise  the  student  should  first  copy  only  the  July  items  of  each  account, 
leaving  space  enough  for  the  items  of  August  and  September.  Then  he  should  close  and 
re-open  the  ledger,  following  the  seventh  and  eighth  steps  on  page  38.  Next  the  items  for 
August  should  be  copied  in  their  respective  accounts,  and  the  ledger  closed  and  re-opened 
as  before.  At  the  end  of  July  and  of  August  the  accounts  not  affecting  the  present  worth 
need  not  be  closed,  but  at  the  end  of  September  all  the  accounts  may  be  closed,  but 
nothing  brought  below  the  rulings.  This  leaves  the  ledger  with  a  finished  appearance. 
This  last  suggestion  may  be  followed  generally  when  finishing  a  set,  unless  the  teacher 
instructs  otherwise. 

The  following  inventories  may  be  used  for  this  exercise  —  For  July  31:  merchandise, 
$600 ;  real  estate,  $825.  For  August  31 :  merchandise,  $675  ;  real  estate,  $300 ;  expense, 
$220.     For  September  30 :  merchandise,  $550;  real  estate,  $640;  expense,  $215. 


^tMcLtnt 


190- 

- 

190 

- 

Avg. 

^ 

100 

July 

1 

2800 

42 


Comprehensive  Bookkeeping 


2 


190- 


190- 


THt^.iAdmdiM.b 


190- 

- 

190 

- 

July 

1 

800 

July 

2 

120 

Aug. 

27 

200 

20 

75 

Sept. 

15 

290 

Aug. 
Sept. 

25 
12 
8 
10 

90 
150 
125 
260 

40 

3 

190- 


July 

1 
20 

1200 

75 

July 

10 

22 

15 

7 

50 

31 

58 

25 

Aug. 

6 

100 

Aug. 

10 

12 
18 

80 

50 

3 

20 

15 

25 
27 

225 

10 

200 

40 

30 

4 

25 

Sept. 

5 

10 

Sept. 

20 

26 

52 
250 

60 

10 
15 

540 
290 

30 

408 

25 

25 

25 

30 

190- 


July 
Sept. 

1 

10 

800 
540 

Aug. 
Sept. 

10 

22 

480 
280 

190- 

^ocfht'yi^b 

July 

10 

15 

22 

7 

50 

Aug. 

15 

25 

225 
10 

40 

Sept. 

5 
25 

' 

10 
25 

30 

190- 


EXPENSE   InTKODUCED 
6 

190- 


CL.   //.   hdV^VQy 


8 

190- 


43 


July 

31 

8 

25 

Aug. 

18 
30 

3 

20 

25 

Sept. 

20 
30 

2 
8 

60 

25 

190- 

- 

190- 

- 

Jaly 

2 
25 

120 

90 

July 
Aug. 

15 
20 

100 
120 

Aug. 

12 

100 

Sept. 

26 

250 

Sept. 

8 

22 

125 

280 

AO 

July 

15 

100 

July 

31 

■ 

50 

Aug. 

10 

20 

400 
120 

Sept. 

20 
30 

50 
400 

Sept. 

10 

260 

If  additional  drill  on  closing  the  ledger  is  desired  at  this  point,  the  student  may  make 
up  accounts  with  a  few  entries  in  each,  and  then  proceed  as  in  the  preceding  exercises. 


SET  I  A.    TRANSACTIONS    INVOLVING   EXPENSE  INTRO- 
DUCED 

Expense  is  one  of  the  use  and  service  accounts.  Uses  and  services 
are  given  and  received  on  the  same  basis  as  property,  that  is,  they  are 
bought  and  sold.  The  term  use  is  applied  in  speaking  of  things ;  the 
term  service  in  speaking  of  persons.  There  are  many  varieties  of  uses 
and  services,  such  as  expense,  interest,  commission,  salaries,  etc. 

Expense  usually  includes  all  items  incidental  to  the  conducting  of 
a  business ;  as,  rent,  freight,  postage,  clerk  hire,  etc. 


44  COMPKEHENSIVE   BOOKKEEPING 

Journalizing.  As  an  illustration  examine  the  transaction  of  January  6  in  Exercise  1, 
which  follows.  In  this  case  the  coal  has  been  bought  for  the  use  of  the  business,  and 
hence  is  debited.     The  transaction  should  be  journalized  as  shown  here : 

Expense  80.00 

Cash  80.00 

See  also  the  transaction  of  January  9  in  the  day-book  and  the  journal  of  the  illustra- 
tive set,  pages  22  and  25. 

In  closing  the  ledger  this  account  closes  into  profit  and  loss.  See 
the  expense  account  in  the  illustrative  ledger,  page  29. 

Suggestions.  The  B  sets  have  numerous  items  in  the  transactions,  and  consequently 
are  better  suited  for  illustrating  the  day-book  than  the  A  sets ;  hence  the  day-book  may 
be  omitted  in  this  set  at  the  discretion  of  the  teacher.  If  the  day-book  is  omitted,  the 
student  may  journalize  as  heretofore  the  exercises  of  this  set  and  post  them.  Then  he 
should  close  the  ledger,  following  the  directions  and  the  illustrations  given  on  pages  28-38. 
Each  of  the  exercises  may  be  written  as  a  separate  set,  or  several  of  them  may  be  grouped 
under  one  set  of  ledger  titles  as  explained  on  page  16.  If  two  or  more  exercises  are 
grouped,  the  ledger  should  be  closed  and  re-opened  after  each  exercise  is  posted. 

If  the  day-book  is  written,  the  suggestions  of  Set  I  B  should  be  read. 

Exercise   1 
January,  190-. 

1.  Began  business  with  cash,  $2800. 

2.  Bought  merchandise  of  C.  V.  Lewis  on  account,  $3500. 

3.  Sold  merchandise  to  James  Diltz  on  account,  $840. 
6.  Paid  cash  for  coal  for  use  of  store,  $80. 

8.    Bought  merchandise  for  cash,  $890. 

10.  Received  cash  from  James  Diltz  on  account,  $625. 

11.  Sold  merchandise  for  cash,  $630. 

13.    Paid  C.  V.  Lewis  cash  on  account,  $.3010. 
15.   Sold  merchandise  to  James  Diltz  on  account,  .$260. 
20.   Bought  merchandise  of  C.  V.  Lewis  on  account,  $420. 
30.    Paid  clerk  hire  for  month  in  cash,  $75. 
Merchandise  inventory,  $2600. 

Exercise  2 
February,  190-. 

(1.   Began  business  with  merchandise,  $2600.) 
2.    Bought  merchandise  of  C.  V.  Lewis  on  account,  $540. 

4.  Sold  merchandise  for  cash,  $360. 

5.  Paid  cash  for  set  of  books  for  store,  $20. 

8.  Sold  merchandise  to  James  Diltz  on  account,  $640. 

10.  Paid  cash  for  repairing  furniture,  $15. 

11.  Received  cash  of  James  Diltz  on  account,  $160. 

12.  Paid  C.  V.  Lewis  cash  on  account,  $333. 
15.  James  Diltz  paid  me  cash  on  account,  $220. 
20.  Paid  cash  for  merchandise,  $.360. 

.     25.    Sold  merchandise  to  James  Diltz  on  account,  $275. 
28.    Paid  month's  gas  bill  in  cash,  $12. 
Merchandise  inventory,  $2020. 


Expense  Introduced  46 

Exercise  3 
March,  190-. 

(1.    Began  business  with  merchandise,  $2020.) 

2.  Sold  merchandise  for  cash,  $260. 

3.  Sold  merchandise  to  James  Diltz  on  account,  $470. 
6.   Bought  stove  for  store,  paying  cash,  $25. 

8.  Sold  merchandise  for  cash,  $140. 

10.  Sold  merchandise  to  John  White  on  account,  $430. 

12.  Paid  cash  for  repairs  on  store,  $140. 

15.  Received  cash  of  James  Diltz  on  account,  $25. 
18.  Sold  merchandise  for  cash,  $475. 

20.   Paid  cash  for  stationery  and  postage,  $9.60. 

25.    Sold  merchandise  to  John  White  on  account,  $230. 

30.    Sold  merchandise  for  cash,  $460. 

30.    Paid  clerk  hire  in  cash,  $60. 

Merchandise  all  sold. 

Exercise  4 
April,  190-. 

(1.    Began  business  with  cash,  $1125.40.) 

3.  Bought  set  of  books  for  store,  paying  cash,  $16. 

4.  Bought  merchandise  of  C.  Y.  Lewis  on  account,  $1620. 

5.  Sold  merchandise  for  cash,  $345. 

8.  Sold  merchandise  to  James  Diltz  on  account,  $650. 

9.  Received  cash  of  A.  E.  Small  for  merchandise,  $248. 
10.  Received  cash  of  James  Diltz  on  account,  $15. 

16.  Paid  cash  for  rent  of  store,  $42. 

18.   Paid  C.  V.  Lewis  on  account,  cash,  $1617.40. 
25.  James  Diltz  paid  me  cash  on  account,  $20. 

29.  Sold  merchandise  to  John  White  on  account,  $325. 

30.  Paid  freight  bills  for  month  in  cash,  $78. 
Merchandise  inventory,  $800. 

Exercise  5 
May,  190-. 

(1.    Began  business  with  merchandise,  $800.) 

3.  Sold  merchandise  to  James  Diltz  on  account,  $240. 

5.  Sold  merchandise  for  cash,  $180. 

6.  Paid  cash  for  varnishing  counters,  $12.50. 

8.  Sold  merchandise  to  John  White  on  account,  $160.50. 

9.  Bought  merchandise  of  C.  V.  Lewis  on  account,  $720. 
12.    Paid  cash  for  coal  for  use  of  store,  $22.75. 

15.    James  Diltz  paid  on  account,  cash,  $240. 

20.    Sold  merchandise  to  John  White  on  account,  $860. 

25.   John  White  paid  cash  on  account,  $725. 

31.  Paid  electric  light  bill  in  cash,  $13.70. 
Merchandise  all  sold. 

Exercise  6 
June,  190-. 

(1.  Began  business  with  cash,  $1096.05.) 
2.   Bought  merchandise  of  S.  A.  Caldwell  on  account,  $900. 

4.  Sold  merchandise  to  James  Diltz  on  account,  $64.20. 


46  Comprehensive  Bookkeeping 

June,  190-. 

5.   Paid  freight  and  dray  age  in  cash,  $10.40. 

8.  Sold  merchandise  to  John  White  on  account,  $80.75. 
10.    Received  cash  of  James  Diltz  on  account,  $50. 

12.    Paid  cash  for  stationery  and  stamps,  $15.30. 

18.    Paid  S.  A.  Caldwell  cash  on  account,  $500. 

23.    Sold  merchandise  for  cash,  $68.20. 

25.   Paid  S.  A.  Caldwell  cash  for  balance  due  him  on  account. 

30.    Paid  clerk  hire  in  cash,  $40. 

Merchandise  inventory,  $750. 

SET   I  B.     TRANSACTIONS   INVOLVING  EXPENSE 
INTRODUCED 

In  this  set  the  exercises  may,  in  the  first  place,  be  copied  in  the 
day-book,  referring  to  the  day-book  on  pages  22  and  23  as  a  model. 
In  writing  the  day-book  there  should  be  copied  in  it  only  such  matter 
as  is  to  form  a  part  of  the  set  as  the  teacher  assigns  it.  For  example, 
if  Exercises  2,  3,  and  4  are  to  be  written  as  one  set,  the  memorandum 
of  May  11  must  be  copied  as  a  part  of  the  set,  but  those  of  May  20 
(the  one  in  parenthesis)  and  June  1  should  be  omitted.  Also,  in  the 
day-book  record,  there  should  be  no  break  between  the  exercises  of 
the  set  as  thus  written.  It  may  be  an  advantage,  however,  to  indi- 
cate in  the  margin  the  beginning  of  each  exercise.  In  journalizing, 
the  checking  of  the  day-book  should  not  be  forgotten.  [See  page 
24.]     In  other  respects,  follow  the  suggestions  given  in  Set  I  A. 

Exercise  1 

May,  190-. 

1.  Charles  Terry  began  business  with  a  cash  capital  of  $3000. 

2.  Bought  of  J.  F.  Gore  on  account,  800  lb.  wool  at  30^. 

2.  Bought  of  W,  H.  Carroll  on  account,  200  yd.  cassimere  at  $1.25 ;  140  yd.  velvet 

at  $1.10. 

3.  Sold  H.  W.  Speer  on  account,  400  lb.  wool  at  40^2^ ;  80  yd.  cassimere  at  $1.50. 

4.  Paid  cash  for  coal  for  use  of  store,  $20. 

5.  Sold  J.  A.  Speck  on  account,  60  yd.  cassimere  at  $1.50  ;  20  yd.  velvet  at  $1.25. 

6.  Paid  J.  P.  Gore  cash  on  account,  $240. 

9.  Sold  H.  W.  Speer  on  account,  200  lb.  wool  at  'iOf ;  20  yd.  cassimere  at  $1.50; 

90  yd.  velvet  at  $1.25. 
10.    Bought  for  cash  700  yd.  broadcloth  at  $2.50  ;  400  yd.  cassimere  at  $1.25  ;  430  yd. 

velvet  at  $1.10. 
10.    Paid  cash  for  stationery  and  postage,  $17.  • 

Merchandise  inventory,  $2866. 

Exercise  2 

(11.    S.  B.  Morgan  began  business  with  the  following  :  200  lb.  wool  at  30)Z^ ;  440  yd. 
cassimere  at  $1.25  ;  700  yd.  broadcloth  at  $2.50  ;  460  yd.  velvet  at  $1.10.) 


Expense  Introduced  47 

May,  190-. 

12.  Sold  J.  A.  Speck  on  account,  150  lb.  wool  at  40^ ;  145  yd.  cassimere  at  $1.50  ; 

120  yd.  broadcloth  at  $3.25. 

13.  Sold  for  cash  50  lb.  wool  at  Sl^f  ;  160  yd.  cassimere  at  $1.40  ;  150  yd.  broadcloth 

at  $3.75  ;  125  yd.  velvet  at  $1.25. 
13.    Paid  freight  bill  in  cash,  $21.60. 

15.  Sold  H.  W.  Speer  on  account,  100  yd.  cassimere  at  $1.50  ;  150  yd.  broadcloth  at 

$3.75. 

16.  Sold  J.  A.  Speck  on  account,  35  yd.  cassimere  at  $1.40;  160  yd.  broadcloth  at 

$3.75  ;  125  yd.  velvet  at  $1.25. 

17.  Paid  gas  bill  in  cash,  $9.40. 

17.    Keceived  cash  of  H.  W.  Speer  on  account,  $712.50. 

17.  Received  cash  of  J.  A.  Speck  on  account,  $1472.75. 

18.  Sold  for  cash  120  yd.  broadcloth  at  $3.50 ;  210  yd.  velvet  at  $1.20. 

19.  Paid  drayage  in  cash,  $8.25. 
Merchandise  all  sold. 

Exercise  3 

(20.   J.  W.  McCammon  began  business,  investing  cash,  $3779.50.) 

20.  Bought  of  W.  H.  Carroll  on  account,  160  yd.  cassimere  at  $1.20 ;  150  yd.  velvet 

at  $1.15. 

23.  Sold  H.  W.  Speer  on  account,  50  yd.  cassimere  at  $1.35  ;  30  yd.  velvet  at  $1.30. 

24.  Bought  of  H.  D.  Vance  for  cash,  800  lb.  wool  at  25;^;  180  yd.   broadcloth  at 

$2.50. 

25.  Sold  J.  A.  Speck  on  account,  20  yd.  cassimere  at  $1.50 ;  15  yd.  broadcloth  at 

$3.25;  20  yd.  velvet  at  $1.30. 

26.  Paid  W.  H.  Carroll  cash  on  account,  $275. 

27.  Sold  H.  W.  Speer  on  account,  300  lb.  wool  at  37^^;  90  yd.  cassimere  at  $1.35; 

60  yd.  broadcloth  at  $3.25. 
27.   Received  cash  of  J.  A.  Speck  on  account,  $80. 
29.   Bought  of  H.  D.  Vance  for  cash,  1500  lb.  wool  at  2b f ;  600  yd.  broadcloth  at 

$2.50;  900  yd.  velvet  at  $1.15. 
31.    Paid  clerk  hire  in  cash,  $55. 
Merchandise  inventory,  $3162.50. 

Exercise  4 
June,  190-. 

(1.    Student  began  business  with  merchandise  as  follows :  2000  lb.  wool  at  25^ ;  605 
yd.  broadcloth  at  $2.50  ;  1000  yd.  velvet  at  $1.15.) 

2.  Sold  C.  A.  Wilson  on  account,  500  lb.  wool  at  30^  ;  40  yd.  broadcloth  at  $2.75. 

3.  Sold  for  cash  75  yd.  broadcloth  at  $2.75;  125  yd.  velvet  at  $1,20  ;  200  lb.  wool 

at  30^. 

3.  Paid  cash  for  stationery  and  stamps,  $15.30. 

4.  Sold  J.  A.  Speck  on  account,  400  lb.  wool  at  30^  ;  80  yd.  broadcloth  at  $2.75. 

5.  Bought  of  J.  F.  Gore  on  account,  500  yd.  broadcloth  at  $2  ;  450  yd.  velvet  at 

$1.05  ;  600  lb.  wool  at  20^2^. 

6.  Sold  C.  A.  Wilson  on  account,  700  lb.  wool  at  25^  ;  300  yd.  broadcloth  at  $2.25  ; 

460  yd.  velvet  at  $1.10. 

8.  Received  cash  of  C.  A.  Wilson  on  account,  $850. 

9.  Sold  J.  A.  Speck  on  account,  225  lb.  wool  at  25;^ ;  120  yd.  broadcloth  at  $2.25. 

10.  Paid  rent  of  store  in  cash,  $25. 

11.  Bought  of  J.  F.  Gore  on  account,  60  yd.  broadcloth  at  $2  ;  300  lb.  wool  at  20^. 


48  COMPKEHENSIVE    BOOKKEEPING 

June,  190-. 

12.  Sold  J.  A.  Speck  on  account,  250  lb.  wool  at  25j^  j  200  yd.  velvet  at  $1.10. 

13.  Paid  J.  r.  Gore  cash  on  account,  $980. 
15.    Sold  for  cash  220  yd.  velvet  at  $1.10. 
15.   J.  A.  Speck  paid  cash  on  account,  $500. 
Merchandise,  inventory,  $1692.25. 

Exercise  5 

(16.   Student  began  business  with  625  lb.  wool  at  20^  ;   550  yd.  broadcloth   at  $2  ; 
445  yd.  velvet  at  $1.05.) 

17.  Bought  of  W.  H.  Carroll  on  account,  240  yd.  cassimere  at  $1.15. 

18.  Sold  D.  R.  Long  for  cash,  125  lb.  wool  at  25^ ;  80  yd.  cassimere  at  $1.25. 

18.  Paid  freight  in  cash,  $7.40. 

19.  Sold  J.  A.  Speck  on  account,  200  lb.  wool  at  25^;   50  yd.  cassimere  at  $1.25; 

125  yd.  broadcloth  at  $2.20  ;  90  yd.  velvet  at  $1.10. 

20.  Paid  W.  H.  Carroll  cash  on  account,  $85. 

21.  Sold  C.  A.  Wilson  on  account,  90  lb.  wool  at  25f  ;  105  yd.  velvet  at  $1.10. 
23.   Paid  gas  bill  in  cash,  $8.25. 

23.   Sold  C.  A.  Wilson  on  account,  110  lb.  wool  at  25;^ ;  30  yd.  velvet  at  $1.10 ;  20  yd. 
cassimere  at  $1.25. 

25.  Received  cash  of  C.  A.  Wilson  in  full  of  account. 

26.  Sold  J.  A.  Speck  on  account,  100  lb.  wool  at  25;? ;  10  yd.  broadcloth  at  $2.25. 
28.  Paid  W.  H.  Carroll  cash  on  account,  $40. 

28.  Received  cash  of  J.  A.  Speck  to  apply  on  account,  $285. 
30.  Sold  D.  R.  Long  for  cash,  10  yd.  velvet  at  $1.10. 
30.  Paid  clerk  hire  in  cash,  $60. 

Merchandise   inventory:  90    yd.   cassimere   at   $1.15;   415  yd.   broadcloth   at   $2; 
210  yd.  velvet  at  $1.05. 

PROMISSORY   NOTES  ^ 

"A  promissory  note  is  an  unconditional  promise  in  writing  made 
by  one  person  to  another,  signed  by  the  maker,  engaging  to  pay  on 
demand  or  at  a  fixed  or  determinable  future  time,  a  certain  sum  in 
money,  to,  or  to  the  order  of,  a  specified  person  or  to  bearer." 

Parties.      There  are  two  original  parties  to  a  note,  the  maker,  or 

the  person  making  the  promise,  and  the  payee,  or  the  person  to  whom"* 

the  money  is  promised  to  be  paid.     There  may  be  subsequent  parties  to 

it.     If  the  payee  transfers  it  to  another  by  indorsement,  he  is  called  an 

indorsor,  and  the  person  to  whom  it  is  thus  transferred  is. called  an 

indorsee.     In  the  note  illustrated  on  page  51  A.  C.  Branders  is  the 

maker   and   James    R.   Penn   is   the   payee.      (For   indorsements    see 

page  100.) 

1  The  statements  of  law  relating  to  notes  made  in  this  section  are  such  as  are  gener- 
ally tme.  If  it  is  desired  to  know  the  law  in  any  particular  state,  the  statutes  should 
be  examined  or  a  competent  lawyer  consulted. 


Pkomissory  Notes  49 

Negotiability.  The  words  negotiahle  and  non-negotiable  as  used 
in  law  have  a  technical  meaning,  which  should  be  distinguished  from 
the  ordinary  meaning  of  the  words.  A  negotiable  note  (or  check, 
draft,  etc.)  is  one  which,  if  it  passes  into  the  possession  of  a  third  party 
before  maturity,  gives  him  an  absolute  claim  against  the  maker.  That 
is,  the  maker  can  not  set  up  any  claims  against  the  note  in  settlement, 
even  though  he  might  have  done  so,  had  it  remained  in  possession  of 
the  original  payee.  It  is  necessary,  also,  that  this  third  party  secure  the 
note  for  a  consideration  and,  at  the  time  of  securing  it,  he  must  not 
know  of  any  claims  that  the  maker  may  have  against  the  payee. 

A  non-negotiable  note,  on  the  other  hand,  is  one  which  does  not  give 
the  person  to  whom  it  may  be  transferred  an  absolute  claim  against  the 
maker.  That  is,  in  settlement  the  maker  may  set  up  any  claims  that 
would  have  been  valid,  had  the  note  remained  in  possession  of  the  origi- 
nal payee.  To  illustrate,  suppose  that  A  gives  B  his  note  for  1300  and 
that  B  transfers  it  to  C ;  and  suppose  also  that  before  the  note  becomes 
due  A  has  a  claim  of  flOO  against  B.  If  the  note  is  of  the  negotiable 
kind  and  C  is  in  legal  possession  of  it,  in  settlement  he  can  collect  the 
entire  1300  from  A.  But  if  it  is  of  the  non-negotiable  kind,  C  can  collect 
only  the  difference  between  the  note  and  A's  claim  against  B,  or  f 200. 

The  words  indicating  the  quality  of  negotiability  are  order  and 
bearer,  or  words  of  like  meaning.  If  one  of  these  occur  in  the  note,  and 
it  has  been  properly  transferred,  it  is  negotiable.  If  it  is  made  pay- 
able to  a  certain  person,  and  without  the  use  of  one  of  these  words,  it 
is  non-negotiable. 

A  non-negotiable  note  is  really  only  a  contract  and  is  governed  by 
the  law  relating  to  contracts. 

Each  of  the  notes  on  pages  51-53  is  negotiable,  and  to  be  trans- 
ferred would  require  an  indorsement.  If  the  word  bearer  were  substi- 
tuted for  order,  they  would  still  be  negotiable  and  could  be  transferred 
with  or  without  an  indorsement,  but  it  would  be  safer  for  the  receiver 
to  require  an  indorsement.  If  the  phrase  or  order  were  omitted  from 
each,  they  would  then  be  non-negotiable. 

Form  and  Requisites  of  a  Note.  The  form  in  which  a  note  is 
written  is  only  a  matter  of  custom  ;  the  law  makes  no  requirements  in 
this  regard,  though  a  few  states  specify  certain  words  that  must  be  in- 
cluded.    There  are  certain  things,  however,  that  are  essential  to  a  note. 


50  COMPKEHENSIVE   BOOKKEEPING 

These  are  indicated  in  the  definition  and  are  enumerated  here  more  in 
detail.  They  conform  substantially  to  the  requirements  of  the  "negotia- 
ble instruments  law,"  which  has  been  passed  by  a  number  of  the  states. 

1.  It  must  be  in  writing. 

2.  The  name  of  the  maker  must  be  expressed  with  certainty.  It 
can  not  be  an  alternative  of  several  persons  named. 

3.  There  must  be  no  uncertainty  as  to  whom  payment  is  to  be  made. 

4.  It  must  contain  a  promise  to  pay  and  the  promise  must  be 
unconditional. 

5.  The  note  must  be  payable  in  money,  and  the  amount  must  be 
definitely  stated.  It  is  usual  for  the  amount  to  be  written  both  in 
figures  and  in  words.  If  there  is  a  difference  in  the  amounts  as  thus 
written,  the  one  in  words  is  taken  as  correct,  as  it  is  not  so  likely  that 
a  mistake  would  be  made  in  the  words  as  in  the  figures. 

6.  The  time  of  payment  must  be  definitely  stated  or  a  time  certain 
to  occur.  A  note  payable  a  certain  number  of  days  after  the  death 
of  a  person  would  be  negotiable,  as  the  event  is  sure  to  occur.  But  a 
note  payable  upon  the  recovery  of  a  person  from  sickness  would  not 
be   negotiable. 

7.  In  general  a  note  must  contain  words  of  negotiability.  These 
are  order  or  hearer^  or  similar  words. 

8.  A  note  must  be  for  a  legal  consideration.  This  is  usually  in- 
dicated by  inserting  the  words  value  received.  These  words  are  not 
essential,  however,  and  if  they  do  not  occur  the  consideration  is  implied. 

9.  It  must  be  delivered.  Except  in  special  cases,  this  is  the  final  step 
necessary  to  perfect  the  execution  of  any  written  contract.  As  long 
as  it  remains  in  the  hands  of  the  maker  (or  of  the  drawee,  if  a  draft)  it 
is  not  binding. 

If  a  note  is  to  draw  interest,  it  must  be  so  stated  ;  otherwise  it 
will  not  draw  interest  until  after  it  is  due,  or  until  demand  is  made,  if 
it  is  a  demand  note. 

Maturity.  By  the  maturity  of  a  note  is  meant  the  date  when  it  is 
due.  Sometimes  this  is  specified  in  the  body  of  the  note  by  month  and 
day;  as,  "  On  August  1,  190-  I  promise,  etc."  Sometimes  it  is  made 
payable  a  certain  number  of  days,  months,  or  years  after  a  specified 
time.  If  this  period  of  time  is  given  in  days,  the  exact  number  must 
be  counted  to  obtain  the  date  of  maturity.     If  the  time  is  given  in 


Promissory  Notes  51 

months,  a  calendar  month  is  meant,  that  is,  from  a  certain  day  of  one 
month  till  the  same  day  of  the  following  month,  provided  this  fol- 
lowing month  has  the  requisite  number  of  days;  otherwise  it  would 
end  on  the  last  day  of  the  shorter  month.  To  illustrate  this  last 
statement,  suppose  four  notes  are  given  respectively  on  January  28, 
29,  30,  and  31,  each  for  one  month.  Each  of  these  would  be  due 
February  28,  except  in  a  leap  year.  If  the  time  is  in  years,  the  rule 
is  similar  to  the  rule  for  months. 

In  the  foregoing,  days  of  grace  have  not  been  considered.  If 
they  are  to  be  taken  account  of,  they  should  be  added  to  the  date  as 
determined  by  the  preceding  considerations. 

In  a  majority  of  the  states,  if  the  date  of  maturity  falls  on  a  holiday 
or  on  Sunday,  the  note  is  payable  on  the  next  succeeding  business  day. 

Days   of   Grace.     These    are    days,   usually   three,   formerly   quite 

generally  allowed  in  addition  to  the  time  given  in  the  note.     Many  of 

the  states  have  abolished  days  of  grace  ;  but  when  they  are  allowed 

interest  is  computed  upon  them,  if  the  note  is  an  interest-bearing  one. 

In  this  text-book  they  have  not  been  considered  in  obtaining  the  date 

of  maturity  or  in  computing  interest  and  discount. 

In  1905  the  only  states  and  territories  that  granted  days  of  grace  were  the  following  : 
Alabama,  Arizona,  Arkansas,  Michigan,  Mississippi,  Nebraska,  Nevada,  New  Mexico, 
North  Carolina,  Oklahoma,  South  Carolina,  South  Dakota,  Texas,  Washington,  and 
Wyoming. 

Of  the  several  varieties  of  notes  four  illustrations  are  here  given : 
INDIVIDUAL  NOTE 


$800.00 

Little  Roch,  Arh. 

,  futif  /O, 

190.. 

Ko 

Due 

3'kiALu  ciO'U^....^  . 

^after  date,  for 

value 

received, 

J  promise  to 

pay^^^^^.^^^.^^^.^^fa.'nv&Q.  /^.  S^em^ru,.-.^^ 

^^^^^^^ 

-or  order. 

at 

^^^           ^       ^                                r-l ^  jH .rl .P  n 

'  Qj    fnrJA^^, 

from date. a 

a.ncL    ^^ 

Dollars, 

with  interest 

100 

t  the  rate 

of- 

^l'?0.--. 

.per  cent 

-per  anninn. 

Ci. 

^.  fS'va^TiclsA^. 

This  is  an  ordinary  form  of  promissory  note. 


52  Comprehensive  Bookkeeping 


PARTNERSHIP   NOTE 


Topeha,  Kansas,  diccfvLot  ^,  190.-. 

Due. 


r^i/xty  cicxt^^.^^^^^^^^^^after  date,  for  value  received, 

W-&  promise  to  pay f.  ^.  of'm-il&y, or  order, 

at^ ?yi&\M^ka.nt^'   fSoynk, 

...^...-..-^.^^...-^■^^^.^^S^cywv  kundv&ci  tw-&ntif-liv-&  a^fici  — Dollars, 

with  interest  from. .  .yruatK^^vCy. .  .at  the  rate  of...&u^kt..-per  cent 
per  annum. 


In  this  note  each  member  of  the  firm  is  individually  responsible  for  its  payment, 
but  in  case  suit  is  brought  they  must  be  sued  together. 


JOINT   NOTE 


$ /¥-6.26  J^o.. 

Pittsburg,  Kansas,  cf&^teAyv6'&v  f ,  190... 

Due, 


.^kivtj  cLaA^.~^.,..-^^^^....^after  date,  for  value  received, 
'W'&  promise  to  pay-^.-~^-^^.~^-..-^-^..-^...^Qf(;Ly}vio&t  ^an&^f^^^^^^^-^^^^^^^^^-^^^^or  order, 

at Sv'lqZ  c/fatio-noyt  JSanfo, 

..■..^..^~-....~v.^.•^^..■^^^ti^&  kwriciveycL  '^aviif-aywo  a^ncl  — Dollars, 

with  interest  from dat& at  the  rate  of. o^t/x. per  cent 

per  annum. 


This  note  in  effect  is  the  same  as  a  partnership  note,  that  is,  each  person  signing 
it  is  individually  responsible  for  its  payment,  and  in  case  suit  is  brought  all  must  be 
sued  together. 


PROMISSORY  Notes  53 

JOINT   AND   SEVERAL  NOTE 


$200.76  Jfo 

Cleveland,  Ohio,  S^&(ybua.\Af  20,  190.^. 

Due. 

^.^-^^^-^^..-^^^^^€.n&  j&a^v^..-^^~^~^~^-^.^..-^after  date,  for  value  received, 

W'&f  av  &itk&v  0-^  u^,  -promise  to  -pay R.  c/.  B'banQx>n'  V^  ^o-., 

or  order,  at ofado-nd  c/taticyyvcul  Bam^k, 

3^'ii^a-  ku^^civ&cL  a^ncl  — Dollars, 

100  ' 

with  interest  from clat& at  the  rate  of^^__Q.&u&yv per  cent 

per  annum,  payable  Qy&v^l-a^^navallu. 


2^ 


In  this  note  each  person  signing  it  is  individually  responsible  for  its  payment,  and 
in  case  suit  is  brought  each  may  be  sued  separately,  or  they  may  be  sued  collectively. 

Kinds  of  Notes  as  related  to  the  Proprietor.  In  relation  to  the  pro- 
prietor notes  are  of  two  kinds  :  1.  Those  which  were  issued  by  other 
persons  and  are  held  by  him.  These  are  called  by  the  proprietor 
hilU  receivable  because  he  is  to  receive  pay  for  them  at  some  future 
time.  2.  Those  which  were  issued  by  the  proprietor  and  are  held  by 
other  persons.  These  are  called  by  him  hilU  payable  because  he  must  ^ 
pay  them  at  some  future  time. 

Journalizing.  When  other  persons'  written  promises  come  into  our 
possession  we  debit  bills  receivable;  and  when  they  are  redeemed  we 
credit  bills  receivable,  because  we  then  give  the  promises  up.  When 
our  own  written  promises  are  issued  we  credit  bills  payable,  because  we 
then  give  them  up  ;  and  when  they  are  redeemed  by  us,  we  debit  bills 
payable,  because  we  then  receive  the  promises  back. 

It  will  be  noticed  that  the  same  note  is  a  bill  receivable  to  the  payee 
and  a  bill  payable  to  the  maker. 

In  the  second  of  the  preceding  notes  J.  C.  Smiley,  the  payee,  at 
the  time  the  note  comes  into  his  possession  would  make  the  following 
entry,  supposing  it  to  be  received  on  account: 


54  Comprehensive  Bookkeeping 

Bills  Rec.  425.50 

J.  M.  Swan  ^  Son  425.50 

At  the  time  it  is  redeemed,  if  paid  in  cash,  his  entry  would  be 

Cash  425.50 

Bills  Bee,  425.50 

J.  M.  Swan  &  Son,  the  makers,  would  have  for  their  entry  at  the 
time  of  issue 


J.  C.  Smiley 

425.50 

Bills  Pay, 

425.50 

and  when  it  is  redeemed 

Bills  Pay. 

425.50 

Cash 

425.50 

Our  entries  would  be  like  those  of  J.  M.  Swan  &  Son  or  J.  C. 
Smiley  according  to  whether  we  were  the  payees  or  the  makers. 

Note.  Bills  receivable  and  bills  payable  are  always  to  be  debited  and  credited  for  the 
face  of  the  note  except  when  a  partial  payment  is  made. 

The  Ledger.  In  the  ledger  the  debit  side  of  the  bills  receivable 
account  shows  the  amount  of  the  notes  that  have  come  into  our  posses- 
sion, while  the  credit  side  shows  the  amount  of  the  notes  that  have 
been  redeemed.  The  difference  shows  the  amount  of  the  notes  still  in 
our  possession,  and  is  hence  an  asset.  The  credit  side  of  this  account 
can  never  be  larger  than  the  debit  side,  as  we  cannot  dispose  of  more 
notes  than  have  come  into  our  possession. 

The  credit  side  of  bills  payable  account  shows  the  amount  of  the 
notes  that  we  have  issued,  and  the  debit  side  the  amount  of  the  notes 
that  we  have  redeemed.  The  difference  shows  the  amount  of  the  notes 
still  outstanding,  and  is  a  liability.  The  debit  side  of  this  account  can 
never  exceed  the  credit,  as  we  can  not  redeem  more  notes  than  we 
have  issued. 

INTEREST 

Interest  is  the  use  of  money,  and  is  paid  for  after  the  money  is 
used. 

Computation.  In  this  text-book  all  interest  (and  discount)  is  to  be 
computed  at  six  per  cent,  unless  some  other  rate  is  mentioned;  and 
360  days  are  to  be  considered  a  year,  when  the  time  is  given  in  days. 


The  Journal-day-book  55 

Journalizing.     If  John  Markham  pays  the  business  ^10  cash  for 
interest,  the  business  receives  the  cash  for  the  interest ;  hence  interest 
(use  of  money),  wliich  has  been  given,  is  credited,  thus : 
Cash  10.00 

Interest  10.00 

If  the  business  pays  Samuel  Henderson  $5  for  interest,  the  business 
gives  up  the  cash  for  the  interest  (use  of  money)  which  it  has  received, 
and  interest  is  debited,  thus  : 

Interest  5.00 

Cash  .  5.00 

The  student  is  cautioned  not  to  be  misled  by  the  form  of  expres- 
sion frequently  used  in  speaking  of  interest.  If  he  reads,  "  I  received 
interest,  $15,"  he  is  apt  to  say  carelessly,  "  Interest  has  been  received ; 
therefore  it  is  debited."  The  expression  evidently  means  that  cash 
has  been  received  for  interest.  The  same  care  must  be  taken  also  with 
the  similar  statement,  "Paid  interest."  With  a  thoughtful  application 
of  the  rule,  however,  but  little  difficulty  should  be  experienced. 

The  Ledger.  The  interest  account,  being  one  that  shows  a  profit 
or  a  loss,  will  close  into  the  profit  and  loss  account  when  the  ledger  is 
closed.     See  the  interest  account  in  the  illustrative  ledger,  page  29. 

THE   BILL-BOOK 

The  hill-hook  is  a  book  in  which  is  kept  a  record  of  notes  and 
accepted  time  drafts.  (Drafts  are  explained  on  page  96.)  The  bill- 
book  given  on  page  5Q  presents  the  principal  features  of  all  bill-books, 
though  they  differ  in  minor  points. 

Besides  this  book  many  firms  handling  a  large  number  of  notes 
keep  also  a  book  called  a  tickler.  In  this  book  space  is  set  apart  for 
each  business  day,  and  the  notes  are  recorded  in  it  under  the  date 
when  they  become  due.  Hence,  no  matter  when  notes  are  received  or 
issued,  or  for  what  time  they  are  to  run,  all  that  become  due  on  the 
same  day  are  listed  together  in  this  book. 

THE  JOURNAL-DAY-BOOK 

If  the  student  has  written  the  preceding  sets  according  to  instruc- 
tions, he  should  by  this  time  understand  clearly  the  difference  between 


Bills  Receivable  and  Bills  Payable  57 

the  day-book  and  the  journal.  They  have  been  kept  separate  to  enable 
him  to  do  this.  This  plan,  however,  is  not  commonly  followed  in 
modern  bookkeeping;  it  is  too  tedious.  There  are  various  ways  of 
lightening  the  work  of  a  bookkeeper  without  in  the  least  impairing 
the  results.  On  the  opposite  page  is  one  of  them,  termed  the  journal- 
day -hook.  This  combines  two  books  into  one.  Thus  we  dispense 
with  one  book.  There  is  considerable  saving  in  writing,  as  the 
explanations,  being  written  along  with  the  journal  expressions,  need 
not  be  so  full  as  when  placed  in  a  separate  book.  There  are  dif- 
ferent forms  of  this  book,  but  the  following  will  be  found  a  good 
one.  The  exercise  of  pages  22  and  23  is  used,  and  enough  is  exhibited 
here  to  serve  as  a  model  for  the  student.  The  numbers  used  in  check- 
ing the  items  in  this  journal-day-book  refer  to  the  pages  of  the  ledger 
illustrated  on  pages  28-30. 


SET  II  A.     BILLS   RECEIVABLE,  BILLS   PAYABLE,  AND 
INTEREST   TRANSACTIONS   INTRODUCED 

Note.  The  student  will  be  able  to  write  the  A  sets  without  the  computation  of 
interest,  as  the  amounts  are  given. 

Suggestion.  In  this  set,  and  in  all  future  work  in  which  a  journal  is  needed,  use 
the  form  given  on  page  58.  If  the  blank  books  used  have  the  wider  of  the  two  central 
columns  at  the  left,  let  the  journal  and  the  day-book  columns  as  there  shown  change 
places.  If  your  blank  books  do  not  have  a  vertical  line  dividing  the  wide  column,  rule 
such  a  line,  unless  the  wide  column  is  too  narrow  for  this  parallel  arrangement.  In  the 
latter  case,  the  journal  portion  of  the  record  of  a  transaction  may  be  arranged  as  was  done 
on  page  25,  and  the  day-book  portion  of  the  record  of  the  same  transaction  written  on  the 
lines  immediately  below. 

Exercise  1 

September,  190— 

^1.  Began  business  with  cash,  $230. 
^  2.   Bought  merchandise  on  my  note,  $820. 
,..'  3.   Sold  merchandise  to  Peter  Ball  on  account,  $125. 

4.  Sold  merchandise  on  note,  $360. 

5.  Bought  merchandise  of  J.  M.  Collins  on  account,  $730. 

6.  Received  note  of  Peter  Ball  on  account,  $80, 
—•8.  Paid  interest  due  in  cash,  $6.95. 

-*  9.   Sold  merchandise  for  cash,  $70. 
^10.  Received  cash  on  notes,  $440. 

10.  Received  cash  for  interest,  $10.20. 
•«11.  Paid  cash  on  note,  $740. 
k12.  Paid  interest  in  cash,  $3.25.  , 

Merchandise  inventory,  $1360. 


58 


Comprehensive  Bookkeeping 


L.P 


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Bills  Receivable  and  Bills  Payable  59 

Exercise  2 
September,  190-. 

(14.  Began  business  with  merchandise,  $1360.) 

14.  Sold  merchandise  on  note,  $425.  \/ 

-15.  Sold  merchandise  for  cash,  $190.  ^ 

16.  Gave  J.  M.  Collins  note  on  account,  $240.  ^ 

-'IT.  Received  cash  for  interest  due,  $12.80.    ^ 

18.  Peter  Ball  gave  me  note  on  account,  $60.  ^ 

-20.  Paid  cash  for  set  of  books  for  store,  $14.40.^ 

—  20.  Paid  interest  in  cash,  $9.20.  »^ 
*^23.  Paid  cash  on  note,  $75.^ 

26.  Sold  merchandise  on  account  to  Peter  Ball,  $230.  V 
"  30.  Received  cash  on  notes,  $485.  V 
"30.   Received  interest  in  cash,  $20.  ^ 
-30.  Paid  freight  bill  in  cash,  $35. 

Merchandise  inventory  none. 

Exercise  3 
October,  190-. 

(1.  Had  on  hand  at  beginning  business,  cash,  $574.20.) 

1.  Bought  merchandise  of  J.  M.  Collins  on  account,  $720. 

2.  Sold  merchandise  on  note,  $460. 

3.  Bought  merchandise  on  my  note,  $110. 

5.  Gave  J.  M.  Collins  note  on  account,  $190, 
*'6.  Received  cash  for  interest,  $16.40. 

6.  Sold  merchandise  to  Peter  Ball  on  account,  $330. 
9.  Received  note  of  Peter  Ball  on  account,  $120. 

—  10.  Paid  interest  in  cash,  $7.40, 
••  12.  Received  cash  on  notes,  $580. 
•*15.  Received  cash  for  interest,  $3.25. 
-^15.  Paid  sundry  expenses  in  cash,  $46.45. 

Merchandise  inventory  none. 

Exercise  4 

(16.  Had  on  hand  cash,  $1120.) 

•«.  18.  Borrowed  cash  on  note,  $260. 

19.  Bought  merchandise  of  J.  M.  Collins  on  account,  $620. 

20.  Sold  merchandise  to  Hiram  Bowser  on  account,  $380. 

21.  Gave  J.  M.  Collins  note  on  account,  $75. 
"■  22.  Paid  interest  due  in  cash,  $18.40. 

25.  Hiram  Bowser  gave  me  his  note  to  apply  on  account,  $350. 
""  25.  Paid  J.  M.  Collins  cash  on  account,  $20. 
*"26.  Received  cash  for  interest  due,  $3.60. 
•"  27.  Received  cash  on  note,  $40. 

28.   Sold  merchandise  on  note,  $160. 
"  29.   Received  cash  for  interest,  $7.20. 
•-  30.  Paid  clerk  hire  in  cash,  $90. 

Merchandise  inventory  none. 


\^Y-- 


-) 


60  Comprehensive  Bookkeeping 

Exercise  5 
November,  190-. 

(1.   Began  business,  having  notes  on  hand,  $470.) 
1.   Bought  merchandise  on  my  note,  $1200. 
-  2.   Sold  merchandise  for  cash,  $420. 
3.   Sold  merchandise  to  Peter  Ball  on  account,  $360. 

—  4.   Received  cash  for  interest,  $15.70. 
5.  Bought  merchandise  of  J.  M.  Collins  on  account, 
8.   Peter  Ball  gave  me  note  on  account,  $200. 

—  9.   Received  cash  for  interest,  $40. 
—  10.   Received  cash  on  notes,  $400. 

--13.  Paid  interest  due  in  cash,  $28.30. 

—  15.  Paid  freight  bill  in  cash,  $29.60. 
Merchandise  inventory,  $900. 

Exercise  6 

(16.  Began  business  with  merchandise,  $900.) 
•^  18.  Borrowed  cash  oh  note,  $800. 

19.  Sold  merchandise  on  note,  $370. 

20.  Sold  merchandise  to  Hiram  Bowser  on  account,  $285. 
22.   Bought  merchandise  of  J.  M.  Collins  on  account,  $248. 

**  23.  Paid  interest  in  cash,  $16.42. 

—  24.  Received  cash  of  Hiram  Bowser  on  account,  $200. 
•*  25.  Received  cash  for  interest,  $23.68. 

-*26.   Received  cash  for  note,  $370. 
—29.   Paid  express  charges  in  cash,  $9.40. 
^  30.  Paid  interest  due  in  cash,  $3.12. 
Merchandise  inventory,  $550. 

SET   II   B.      BILLS    RECEIVABLE,    BILLS    PAYABLE,    AND 
INTEREST   TRANSACTIONS   INTRODUCED 

Suggestion.    It  will  be  good  practice  for  the  student  to  write  the  notes  in  this  set. 
In  other  respects  the  suggestion  of  Set  II  A  may  be  followed. 

Exercise   1 

September,  190-. 

.»  Ir  D.  A.  Rankin  began  business  this  day  with  invoice  of  lumber  amounting  to  $3000. 
"^2.    Sold  W.  L.  Torrence  for  cash,  10  M  ft.  hemlock  boards  at  $12  per  M. 

3.    Sold  R.  F.  Graham  on  his  note  at  6  days,  with  interest  at  10  %,  3  M  ft.  hemlock 
boards  at  $12  per  M  ;  8  M  XX  shingles  at  $4  per  M. 
^^4.    Borrowed  cash  of  J.  T.  McKitrick  on  note  at  90  days,  with  interest  at  10%,  $450. 
'^b.   Bought  set  of  books  for  cash,  $13.25. 
6.    Sold  S.  G.  Craig  on  account,  20  M  ft.  No.  2  fencing  at  $10.75  per  M ;  12  M  laths 
at  $3  per  M  :  15  M  XX  shingles  at  $4  per  M.  i 

■  -  8.    Paid  in  cash  interest  on  note  of  4th  accrued  to  date.  -   •o 
•  8.    Received  cash  of  S.  G.  Craig  on  account,  $25. 
"  9.    Received  cash  of  R.  F.  Graham  for  his  note  of  the  3rd,  $68. 

*~  9.    Received  cash  for  interest  on  preceding  note.   [See  "Fractions,"  bottom  of  page  66.] 
Merchandise  inventory,  $2600. 


Bills  Receivable  and  Bills  Payable  61 

Exercise  2 

September,  190-. 

(10.   M.  M.  Milford  commenced  business  with  a  stock  of  lumber  amounting  to  §2600.) 

10.  Sold  C.  B.  McMuUen  on  account,  9  M  ft,  hemlock  boards  at  $12  per  M  ;  6  M  ft. 

flooring  at  $25  per  M. 

11.  Sold  H.  H,  Martin  on  his  note  at  8  days,  with  interest  at  8%,  20  M  XX  shingles  at 

$4  per  M  ;  7  M  laths  at  $3  per  M  ;  9  M  ft.  flooring  at  $25  per  M.  "^^  5^  (•      - 

12.  C.  B.  McMullen  gave  note  at  15  days,  with  interest  at  10  %,  on  account,  $250.    - 
-12.    Sold  A.  B.  Small  for  cash,  7  M  ft.  spruce  lumber  at  $14  per  M. 

-  15.    Paid  cash  for  stationery  and  postage,  $8.50. 

16.    Sold  C.  B.  McMullen  on  account,  5  M  XX  shingles  at  $4  per  M  ;  9  M  ft.  flooring 
at  $25  per  M. 
*49.    Keceived  cash  of  H.  H.  Martin  for  his  note  of  the  11th. 
"-19.    Received  cash  of  II.  H.  Martin  for  interest  on  preceding  note.  ST  ic  Ck 
•^0.   Paid  cash  for  work  in  lumber  yard,  $16. 
20.    Sold  entire  stock  to  H.  H.  Martin  on  his  note  at  60  days,  with  interest,  at  10  % 
for  $1550. 

Exercise   3 

(22.    F.  D.  McKinley  commenced  business,  holding  notes  of  the  12th  and  the  20th 

against  others,  $1800.) 
23.    Bought  of  AVilliam  Murchie  on  account,  invoice  of  lumber,  $1450. 

25.  Sold  S.  G.  Craig  on  account,  14  M  ft.  No.  2  fencing  at  $10.75  per  M ;  12  M  XX 

shingles  at  $4  per  M.     /  f^^"  o 

26.  Gave  William  Murchie  on  account,  note  at  60  days,  with  interest  at  10  %,  $800. 
••  27.    Received  cash  for  note  of  12th  due  to-day. 

•►  27.   Received  cash  for  interest  on  preceding  note. 

29.  Sold  S.  C.  Craig  on  account,  4  M  ft.  flooring  at  $25  per  M ;  15  M  X  shingles  at 

$3  per  M. 

30.  Bought  of  J.  W.  McClenahan  invoice  of  lumber  and  gave  in  payment  note  of 

20th,  held  against  H.  H.  Martin,  $1550. 
•*«30.    Received  of  H.  H.  Martin  cash  for  interest  due  on  preceding  note.  •  '     -■    , 
30.    Gave  William  Murchie  cash  in  part  payment  of  note  of  26th,  $200. 

—  30.    Gave  William  Murchie  cash  in  payment  of  interest  on  note  of  26th  accrued  to 

date.  ~       vf  ^ 
Merchandise  inventoiy,  $2670. 

Exercise  4 

Octobej,  190-. 

(1.    A.  M.  Stevenson  began  business  with  lumber  on  hand,  $2670.) 

2.  Sold  B.  C.  McMullen  on  account,  15  M  laths  at  $3  per  M ;  13  M  ft.  hemlock 

boards  at  $12  per  M. 

3.  Sold  H.  Finney  on  his  note  at  30  days,  with  interest  at  8  %,  16  M  XX  shingles  at 

$4  per  M  ;  17  M  ft.  spruce  lumber  at  $15  per  M  ;  3  M  ft.  flooring  at  $25  per  M. 
f^  4.    Received  cash  of  C.  B.  McMullen  on  account,  $125. 
'^.   Paid  cash  for  coal  for  use  in  office,  $18. 
7.    Sold  S.  G.  Craig  on  account,  25  M  ft.  No.  2  fencing  at  $11  per  M. 
7.   Bought  of  William  Murchie  on  account,  invoice  of  lumber,  $960. 
9.    Sold  C.  B.  McMullen  on  account,  9  M  ft.  hemlock  boards  at  $12  per  M ;  5  M  ft. 
flooring  at  $25  per  M. 


62  Comprehensive  Bookkeeping 

October,  190-. 

10.    Gave  William  Murchie  note  at  5  days,  with  interest  at  10  %,  to  apply  on  account, 

$600. 
12.   Sold  S.  G.  Craig  on  account,  12  M  XX  shingles  at  f 4  per  M  ;  7  M  ft.  flooring  at 
$25  per  M  ;  6  M  ft.  spruce  lumber  at  $15  per  M. 
^13.  Paid  freight  and  drayage  in  cash,  $17.25. 
•-13.   Received  cash  in  part  payment  of  note  of  3rd,  $375. 
"- 13.  Received  cash  for  interest  on  note  of  3rd  accrued  to  date.      ^  »  r 
•^14.   S.  G.  Craig  paid  cash  on  account,  $250. 
%.15.  Paid  note  of  10th  in  cash. 
^  15    Paid  cash  for  interest  on  note  of  10th.  .g  3 
Merchandise  inventory,  $2272. 

Exercise   5 

(16.    M.  M.  Milford  had  on  hand  at  beginning  business,  lumber  valued  at  $2272.) 
•'17.   Sold  William  Barclay  for  cash,  25  M  ft.  No.  2  fencing  at  $11  per  M  ;  5  M  ft.  pine 
boards  at  $18  per  M. 

18.  Sold  C.  B.  McMullen  on  account,  16  M  XX  shingles  at  $4  per  M  ;  8  M  laths  at  $3 

per  M  ;  5  M  ft.  flooring  at  $25  per  M  ;  2  M  ft.  spruce  lumber  at  $15  per  M. 

19.  Sold  J.  C.  Long  on  his  note  at  11  days,  with  interest  at  8  %,  12  M  laths  at  $3  per 

M  ;  8  M  ft.  pine  boards  at  $18  per  M  ;  9  M  ft.  spruce  lumber  at  $15  per  M.  ^jST 
21.  Received  of  C.  B.  McMullen  note  at  30  days,  with  interest  at  10  %,  to  apply  on 

account,  $200. 
•-21.   Paid  cash  for  work  in  lumber  yard,  $18. 

23.    Sold  S.  G.  Craig  on  account,  2  M  ft.  hemlock  boards  at  $12  per  M  ;  17  M  ft. 

No.  2  flooring  at  $11  per  M  ;  8  M  X  shingles  at  $3  per  M. 

25.  Bought  of  David  Wylie  on  note  at  6  days,  with  interest  at  10  %,  invoice  of  lumber, 

$490. 

26.  S.  G.  Craig  gave  on  account,  note  at  60  days,  with  interest  at  8  %,  $225. 
—26.  Paid  electric  light  bill  in  cash,  $6.25. 

•-28.  Received  cash  of  S.  G.  Craig  for  balance  due  on  account. 

—30.  Received  cash  of  J.  C.  Long  for  his  note  of  the  19th,  $315. 

"-  30.  Received  cash  for  interest  on  preceding  note.     77^^ 

>.31.  Paid  David  Wylie  cash  for  note  of  25th. 

^1.  Paid  cash  for  interest  on  preceding  note.  ^^"^ 

•»31.  Received  cash  for  interest  accrued  to  date  on  notes  of  the  21st  and  the  26th. 
Merchandise  inventory,  $1665. 


SET  III  A.     REAL  ESTATE  TRANSACTIONS  INTRODUCED 

Note.  If  it  is  preferred.  Set  IV,  dealing  with  the  cash-book,  may  be  introduced  at 
this  place. 

Under  the  title  Real  Estate  is  included  all  lands,  houses,  and  lots, 
etc.     In  journalizing  it  should  be  treated  like  merchandise. 

The  real  estate  account  may  have  an  inventory  and  shows  a  profit 
or  a  loss ;  hence  it  must  be  taken  into  account  in  closing  the  ledger. 
This  set  may  be  written  up  in  a  manner  similar  to  Set  II. 


Real  Estate  Transactions  63 

Exercise  1 
January,  190-. 

1.  Began  business,  investing  cash,  $3000. 

2.  Bought  store  and  lot  for  cash,  $2500. 

3.  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $1500. 

4.  Sold  merchandise  on  note,  $860. 

5.  Sold  merchandise  to  Walter  Reynolds  on  account,  $450. 

5.  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $500. 

6.  Gave  John  Elliott  &  Co.  note  on  account,  $1200. 
8.    Received  cash  on  note,  $860. 

8.  Received  cash  for  interest  due,  $2.35. 

9.  Paid  gas  bill  in  cash,  $12.35. 

10.    Sold  merchandise  to  Walter  Reynolds  on  account,  $145. 
10.    Sold  store  and  lot  for  cash,  $2650. 
Merchandise  inventory  none. 

Exercise  2 

(11.    Began  business,  having  cash  on  hand,  $4000.) 

12.  Bought  merchandise  on  my  note,  $1460. 

13.  Sold  merchandise  to  Walter  Reynolds  on  account,  $500. 

15,  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $690. 

15.  Sold  merchandise  for  cash,  $600. 

16.  Bought  store  in  which  business  is  conducted  and  gave  note,  $2000. 

17.  Received  cash  for  interest  due,  $12.60. 

17.  Sold  merchandise  to  Walter  Reynolds  on  account,  $220. 

18.  Sold  merchandise  for  cash,  $320. 

19.  Paid  cash  on  note,  $450. 

19.  Paid  cash  for  interest  on  above,  $4.40. 

20.  Paid  rent  in  cash,  $25. 

20.    Sold  merchandise  to  Walter  Reynolds  on  account,  $170. 
Merchandise  inventory  none. 
Real  estate  valued  at  $2100. 

Exercise  3 

(22.  Had  on  hand  store  and  lot,  valued  at  $2100.) 

22.  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $1500. 

23.  Sold  merchandise  to  Walter  Reynolds  on  account,  $255. 

24.  Sold  merchandise  on  note,  $420. 

25.  Gave  John  Elliott  &  Co.  my  note  on  account,  $900. 

25.  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $300. 

26.  Sold  merchandise  to  Thomas  Moore  on  account,  $760. 

26.  Walter  Reynolds  paid  me  cash  on  account,  $160. 

27.  Received  cash  for  note  due,  $420.  s, 

27.    Received  cash  for  interest  due,  $8.60.  ^      • 

29.    Paid  cash  on  note,  $85. 

29.  Received  cash  of  Walter  Reynolds  on  account,  5$40. 

30.  Sold  store  and  lot  for  cash,  $2400.  -  «'*' 

31.  Paidclerkhirein  cash,  $38. 
Merchandise  inventory,  $400. 


64  Comprehensive  Bookkeeping 

_  ,  ^^  Exercise  4 

February,  190-. 

(1.  Began  business,  having  on  hand  merchandise,  $400.) 

2.  Sold  merchandise  to  Thomas  Moore  on  account,  $190. 

3.  Bought  merchandise  on  note,  $926. 

4.  Sold  merchandise  to  Walter  Reynolds  on  account,  $590. 

5.  Bought  house  and  lot  on  note,  $1200. 

6.  Thomas  Moore  gave  me  his  note  on  account,  $160. 

6.  Sold  merchandise  to  Walter  Reynolds  on  account,  $420. 

8.  Received  note  of  Walter  Reynolds  on  account,  $300. 

8.  Sold  merchandise  to  Thomas  Moore  on  account,  $52. 

9.  Received  cash  on  notes,  $460. 

9.    Sold  merchandise  to  Walter  Reynolds  on  account,  $200. 
10.   Paid  interest  due  in  cash,  $6.50. 

10.  Paid  freight  bill  in  cash,  $14.50. 
Merchandise  inventory  none. 
House  and  lot,  valued  at  $1250. 

Exercise  5 

(11.  Began  business,  having  house  and  lot,  valued  at  $1250.) 

11.  Bought  merchandise  of  John  Elliott  &  Co.  on  account,  $1600c 

12.  Sold  merchandise  to  Thomas  Moore  on  account,  $610. 

13.  Gave  John  Elliott  &  Co.  note  on  account,  $700. 

15.  Sold  merchandise  to  Walter  Reynolds  on  account,  $468. 

15.  Thomas  Moore  gave  me  his  note  on  account,  $400. 

16.  Sold  merchandise  to  Walter  Reynolds  on  account,  $352. 

17.  Received  cash  for  interest  due,  $5. 16. 

18.  Sold  house  and  lot  for  cash,  $1225. 

18.  Sold  merchandise  to  Thomas  Moore  on  account,  $50. 

19.  Paid  interest  due  in  cash,  $8.20. 

19.  Received  of  Thomas  Moore  note  on  account,  $200. 

20.  Paid  drayage  on  merchandise  in  cash,  $9.60. 
Merchandise  inventory  none. 

Exercise  6 

(22.  Invested  in  business,  notes,  $600.) 

22.  Bought  merchandise  on  note,  $1200. 

22.  Sold  merchandise  to  Walter  Reynolds  on  account,  $210. 

23.  Received  cash  on  note,  $600. 

23.  Received  cash  for  interest  due,  $8.42. 

24.  Sold  merchandise  for  cash,  $500. 

25.  Walter  Reynolds  paid  cash  on  account,  $175. 

25.  Sold  merchandise  for  cash,  $125. 

26.  Bought  store  and  lot  for  cash,  $1300. 

26.  Sold  merchandise  to  Walter  Reynolds  on  account,  $50. 

27.  Sold  Thomas  Moore  merchandise  on  account,  $265. 

28.  Paid  interest  due  in  cash,  $12.40, 
28.  Paid  freight  bills  in  cash,  $17.25. 
Merchandise  inventory,  $100. 

Store  and  lot,  valued  at  $1200. 


I 


Real  Estate  Transactions  65 


SET  III   B.     REAL  ESTATE  TRANSACTIONS  INTRODUCED 

SuGGESTiox.     This  set  may  be  written  up  in  a  manner  similar  to  Set  II. 

Selling  Price  List.  Flour  per  bbl,,  f6.50 ;  corn  meal  per  bbl.,  $3.25;  young 
hyson  tea  per  lb.,  QOj^ ;  mackerel  per  lb.,  10;^ ;  chocolate  per  lb.,  30^;  shoe  blacking  per 
box,  t>f  ;  currants  per  lb.,  12^)^. 

V.      inn  Exercise  1 

November,  190-. 

1.  Student  began  business,  investing  cash,  $4000. 

2.  Bought  store  and  lot  for  cash,  |1800. 

3.  Bought  invoice  of  merchandise  of  H.  P.  Espy  on  account,  $1400. 

4.  Sold  John  Currie  on  note  at  60  days,  9  bbl.  flour ;  12  bbl.  corn  meal ;  4  lb.  Y.  H. 

tea. 
6.   Paid  light  bill  in  cash,  $8. 

5.  Gave  H.  P.  Espy  on  account,  note  at  4  days,  with  interest  at  10  %,  $500. 

6.  Sold  C.  E.  Hanna  on  account,  15  bbl.  corn  meal ;  80  lb.  mackerel ;  25  lb.  choco- 

late ;  40  boxes  shoe  blacking. 

9.  Paid  note  of  5th  in  cash. 

9.  Paid  cash  for  interest  on  note  of  5th. 

10.   Sold  store  and  lot  to  J.  H.  Wilson  on  his  note  at  90  days,  $1900. 
Merchandise  inventory,  $1260. 

Exercise  2 

(11.  S.  H.  Maxwell  began  business  with  merchandise,  $1260.) 

12.  Bought  8  city  lots  of  W.  R.  Trotter,  giving  in  payment  note  at  90  days,  with 
interest,  $1500. 

12.  Sold  C.  E.  Hanna  on  account,  20  bbl.  flour  ;  40  lb.  Y.  H.  tea ;  50  lb.  currants. 

13.  Sold  J.  H.  Wilson  on  his  note  at  5  days,  with  interest  at  8  %,  9  bbl.  flour ;  60  lb. 

mackerel ;  35  lb.  chocolate  ;  50  boxes  shoe  blacking. 

15.  Received  of  C.  E.  Hanna  note  at  3  days,  with  interest  at  10  %,  to  apply  on  account, 

$125. 

16.  Sold  John  Currie  for  cash,  18  bbl.  flour  ;  20  bbl.  corn  meal ;  120  lb.  mackerel. 

17.  Paid  accrued  interest  on  note  of  12th  in  cash. 

18.  Received  cash  for  notes  of  the  13th  and  the  15th,  $202.50. 
18.  Received  cash  for  interest  on  preceding  notes. 

20.  Sold  the  8  city  lots  for  $1580  in  cash. 
Merchandise  inventory,  $863. 

Exercise  3 

(22.  W.  L.  McClenahan  began  business  with  merchandise,  $863.) 

22.  Sold  J.  C.  Ford  for  cash,  22  bbl.  corn  meal ;  140  lb.  mackerel ;  80  lb.  chocolate  ; 

140  lb.  currants. 

23.  Bought  of  H.  P.  Espy  on  account,  invoice  of  merchandise,  $928.40. 

24.  Bought  of  D.  A.  Wylie  on  note  at  60  days,  with  interest,  320  acres  land,  $8000. 

25.  Sold  C.  E.  Hanna  on  account,  35  bbl.  corn  meal ;  150  lb.  Y.  H.  tea  ;  240  lb.  cur- 
rants ;  125  lb.  chocolate. 

26.  Paid  freight  in  cash,  $14.70. 

F 


66  COMPKEHENSIVE   BOOKKEEPING 

November,  190-. 

27.   C.  E.  Hanna  gave  note  at  90  days  on  account,  $200. 
27.   Sold  80  acres  of  land  to  H.  C.  Smiley  for  cash,  $2200. 
30.   Paid  in  cash  accrued  interest  on  note  of  24th. 
30.   Sold  entire  stock  of  goods  remaining  for  cash,  $1075. 
Inventory  :  real  estate  valued  at 


Exercise  4 
December,  190-. 

(1.  J.  L.  Beers  opened  a  set  of  books  this  day,  having  on  hand  240  acres  of  land 

valued  at  $6000.) 

1.  Bought  of  H.  P.  Espy  on  account,  invoice  of  merchandise,  $650. 

2.  Sold  80  acres  of  land  to  H.  W.  Speer  on  his  note  at  60  days,  with  interest,  $2400. 

3.  Sold  C.  E.  Hanna  on  account,  15  bbl.  flour ;  20  bbl.  corn  meal ;  175  lb.  currants.^ 

4.  Paid  freight  and  drayage  in  cash,  $15.75. 

6.  Sold  remainder  of  land  to  J.  C.  Nevins  for  cash,  $4500. 

7.  Sold  C.  E.  Hanna  on  account,  80  lb.  Y.  H.  tea ;  245  lb.  mackerel. 

8.  Gave  H.  P.  Espy  on  account,  note  at  .30  days,  with  interest  at  10%,  $400. 

9.  Bought  of  W.  H.  Carroll  on  note  at  60  days,  with  interest  at  8  %,  invoice  of  mer- 

chandise, $875.50. 

10.  C.  E.  Hanna  gave  note  at  30  days  on  account,  $200. 

11.  Received  cash  in  part  payment  of  note  of  2nd,  $800. 
11.  Received  cash  for  accrued  interest  on  note  of  2nd. 

13.  Received  cash  of  C.  E.  Hanna  to  balance  account. 

14.  Paid  in  cash  accrued  interest  on  notes  of  the  8th  and  the  9th. 

15.  Paid  rent  of  store  in  cash,  $30. 
Merchandise  inventory,  $1292. 

Exercise  5 

(16.   W.  L.  Travis  commenced  business  with  merchandise,  $1292.) 

17.  Sold  J.  V.  Brown  on  account,  260  lb.  mackerel ;  160  boxes  shoe  blacking ;  180 

lb.  currants  ;  60  lb.  chocolate. 

18.  Bought  store  and  lot  of  R.  H.  Black  on  note  at  30  days,  with  interest,  $1000. 

20.  Sold  J.  S.  Trout  for  cash,  80  bbl.  corn  meal ;  150  lb.  chocolate. 

21.  J.  V.  Brown  paid  cash  on  account,  $70. 

22.  Paid  cash  for  stamps  and  stationery,  $4.25. 

23.  Sold  J.  V.  Brown  on  account,  20  lb.  mackerel ;  25  bbl.  flour  ;  150  lb.  Y.  H.  tea. 

24.  Sold  J.  H.  Clark  on  his  note  at  4  days,  with  interest  at  10%,  45  bbl.  flour  ;  18  bbl. 

corn  meal ;  120  lb.  chocolate  ;  250  lb.  currants. 

24.  Paid  cash  for  permanent  improvements  on  store,  $175. 

25.  Sold  J.  V.  Brown  on  account,  90  lb.  currants ;  125  boxes  shoe  blacking ;  75  lb. 

chocolate ;  225  lb.  Y.  H.  tea. 
27.  Sold  J.  S.  Trout  for  cash,  10  bbl.  corn  meal. 

1  Fractions.  In  computing  the  value  of  this  item  a  fraction  of  a  cent  will  be  ob- 
tained ;  but  a  fraction  of  a  cent  should  never  appear  in  the  money  columns.  It  must  be 
made  an  even  cent.  In  each  computation  in  this  text-book  a  fraction  of  five  mills  or  over 
has  been  called  one  cent ;  each  fraction  less  than  five  mills  has  been  dropped  ;  as, 

31  yd.  Calico  at    6^^,     $1.94 

20  lb.  Nails      "     4i^,         .83 

5  pr.  Hose     "  16|j*,        .83 

$3.60 


The  Cash-Book  67 

December,  190-. 

28.    Keceived  cash  for  note  of  24th,  $418.25. 

28.  Received  cash  for  interest  on  preceding  note. 

29.  Paid  cash  for  interest  due  on  note  of  18th. 
31.   Paid  clerk  hire  in  cash,  $25. 

Inventories  :  merchandise,  $125  ;  store  and  lot,  valued  at  $1200. 


COMPOUND    ENTRIES 

Compound  entries  arise  in  transactions  involving  two  or  more 
debit  items  or  two  or  more  credit  items.  For  example,  suppose  we 
sell  J.  S.  Hayes  merchandise,  190,  and  he  gives  us  a  note  for  $50,  the 
balance  to  be  on  account.  Bills  receivable  is  debited  by  the  rule  and 
merchandise  credited.  Then  we  debit  J.  S.  Hayes  for  the  part,  $40, 
for  which  he  gives  us  his  oral  or  implied  promise.  The  journal  entry 
should  be  arranged  as  shown  here  : 

J.  S.  Hayes  40.00 

Bills  Rec,  50.00 

Mdse.  90.00 

Again,  if  we  should  receive  cash  for  a  note  of  $150  and  for  the 
interest  due  on  it,  $8,  we  should  have  a  like  entry.  The  cash  has  been 
received  and  the  note  and  interest  have  been  given.  Instead  of  making 
two  entries  out  of  this,  it  should  be  arranged  as  here  shown,  if  placed 
in  the  journal : 


Cash 

158.00 

Bills  Rec, 

150.00 

Interest 

'  8.00 

THE    CASH-BOOK 

The  cash-book,  a  book  kept  by  every  prudent  business  man,  contains 
a  record  of  the  cash  received  and  paid  out.  Such  a  book  will  save 
a  considerable  amount  of  writing  and  a  great  deal  of  posting.  It  is 
really  a  modified  form  of  the  journal.  In  fact,  the  journal  principle 
runs  through  all  books  from  which  postings  are  made. 

It  is  usual  to  keep  this  cash  record  on  two  opposite  pages.  When- 
ever cash  is  received,  the  amount  and  the  source,  from  which  it  is 
received  are  recorded  upon  the  left-hand  page ;  and  whenever  cash  is 
paid  out,  the  amount  and  the  purpose  for  which  it  is  paid  are  recorded 
upon  the  right-hand  page. 

To  understand  the  plan  of  the  cash-book,  let  us  suppose  a  number 


68 


COMPKEHENSIVE   BOOKKEEPING 


of  transactions,  each  involving  cash.  If  we  classify  these,  putting  in 
one  group  all  those  in  which  cash  is  debited,  and  in  the  other  all  those 
in  which  cash  is  credited,  we  may  arrange  them  after  the  plan  of  the 
journal  as  follows : 


Cash 


Mdse. 


Cash 


Bills  Rec, 


Cash 


Interest 


Cash 


Group  No.  1 

Group  No.  2 

50.00 

Bills  Pay. 

50,00 

Gash 

80.00 

Interest 

ec,                            80.00 

Cash 

10,00 

Expense 

10.00 

Cash 

20.00 

B.  C.  Allen 

^tone                       20.00 

Cash 

40.00 


40.00 


3.00 


3.00 


10.00 


10.00 


5.00 


5.00 


These  entries  now  may  be  modified  in  form.  Instead  of  debiting 
cash  in  Group  No.  1  each  time  some  other  item  is  credited,  cash  may 
be  debited  for  the  sum  of  these  credits.  Group  No.  2  may  be  treated 
in  a  similar  manner.  If  this  is  done,  the  entries  for  the  two  groups 
may  be  arranged  as  follows : 


Group  No. 

1 

Group  No.  2 

Cash 

160.00 

Bills  Pay. 

40.00 

Mdse. 

50.00 

Interest 

3.00 

Bills  Rec, 

80.00 

Expense 

10.00 

Interest 

10.00 

D.  C.  Allen 

5.00 

R.  S.  Stone 

20.00 

Cash 

. 

58.00 

We  may  still  further  modify  the  form  of  the  entry  in  Group  No.  1, 
having  the  debit  of  cash  follow  the  credit  items.  This  will  give  it  the 
same  form  of  arrangement  as  that  of  Group  No.  2.  If,  at  the  same 
time,  we  separate  the  two  groups  with  a  vertical  line  and  add  a  hori- 
zontal head  line,  we  shall  have  in  outline  a  common  form  of  the  cash- 
book.     The  preceding  entries  arranged  as  here  suggested  would  appear 

as  follows : 

CASH-BOOK 


Group  No. 

1 

Group 

No.  2 

Mdse. 

50.00 

Bills  Pay. 

40.00 

Bills  Rec. 

80.00 

Interest 

3.00 

Interest 

10.00 

Expense 

10.00 

R.  S.  Stone 

20.00 

B.  C.  Allen 

5.00 

Cash,  Dr. 

160.00 

Cash,  Cr, 

58.00 

The  Cash-Book  69 

The  cash-book  with  all  its  rulings  is  illustrated  on  pages  72  and  73. 

The  left-hand  page  (or  part)  of  a  cash-book  is  spoken  of  as  the 
debit  side,  the  meaning  being  that  cash  is  debited  for  the  amounts  there 
recorded ;  the  right-hand  page  is  spoken  of  as  the  credit  side,  the 
meaning  being  that  cash  is  credited  for  the  amounts  there  recorded. 
The  student  is  cautioned,  therefore,  not  to  think  of  the  separate  items 
on  the  debit  side  of  the  cash-book  as  being  debited.  Remember  that 
they  are  the  credit  portion  of  a  full  journal  entry.  Give  the  credit 
side  of  the  cash-book  a  similar  consideration. 

It  is  believed  that  it  will  be  apparent  now  that  the  cash-book  is  a 
modified  form  of  journal  in  which  only  one-half  of  the  complete  journal 
entry  is  recorded  for  each  separate  transaction  ;  and  then  at  convenient 
periods  these  amounts  are  added  and  cash  is  debited  and  credited  for 
the  totals  respectively  of  the  debit  and  the  credit  sides  of  the  cash-book. 

When  the  cash-book  is  used,  all  cash  items  should  be  omitted  from 
the  journal. 

Balancing.  The  cash-book  is  balanced  in  substantially  the  same 
way  that  a  ledger  account  is  balanced ;  hence  it  is  not  thought  neces- 
sary to  give  any  explicit  direction  with  regard  to  it.  A  careful  exami- 
nation of  the  cash-book  on  the  following  pages  should  be  sufficient. 

It  may  often  happen  that  the  bottom  of  the  page  is  reached  at  a  time 
when  it  is  not  desirable  to  balance  the  cash-book.  When  this  occurs, 
each  column  may  be  footed  and  these  footings  carried  to  the  top  of  the 
corresponding  columns  on  the  next  page.  To  indicate  the  source  of 
these  amounts  the  phrase.  Brought  forward,  or  some  similar  expression, 
may  be  written  in  the  explanatory  column  on  the  new  page.  At  the 
bottom  of  the  page  the  double  rulings  need  not  be  used,  as  they  really 
indicate  either  that  the  work  is  complete  at  the  point  where  they  are 
used  or  that  a  definite  stage  in  the  record  is  reached. 

Posting.  In  posting,  credit  the  proper  account  in  the  ledger  for  the 
amount  set  opposite  each  item  on  the  left-hand  page  of  the  cash-book, 
and  debit  the  proper  account  in  the  ledger  for  the  amount  set  opposite 
each  item  on  the  right-hand  page  of  the  cash-book.  Then  debit  the 
cash  account  for  the  footing  of  the  left-hand  page,  and  credit  the  cash 
account  for  the  footing  of  the  right-hand  page. 

The  ledger  pages  used  in  checking  the  following  cash-book  are  as 
they  would  appear,  if  it  were  posted  to  the  ledger  on  pages  28-30. 


70  Comprehensive  Bookkeeping 

The  January  portion  of  the  following  cash-book  is  from  the  trans- 
actions recorded  on  pages  22  and  23.  The  February  portion  does  not 
represent  any  work  of  the  text-book.  It  is  added  to  show  the  manner 
of  continuing  the  cash-book  after  it  has  been  balanced.  In  this  portion, 
only  the  debit  and  the  credit  items  have  been  given,  as  that  is  deemed 
sufficient  to  show  the  general  arrangement. 

SET   IV  A.     CASH-BOOK   TRANSACTIONS 

Note  1.  This  set  may  be  introduced  immediately  after  Set  JIB,  if  it  is  desired  to 
begin  the  use  of  the  cash-book  that  early  ;  or  it  may  be  deferred  to  a  later  time,  at  the 
discretion  of  the  teacher.  Whenever  it  is  introduced,  read  the  article  on  "Transactions 
involving  a  Part  Payment  in  Cash,"  page  76,  before  writing  subsequent  sets. 

Note  2.  In  this  set  the  balance  of  cash  in  any  exercise  will  agree,  not  with  the 
amount  of  cash  in  the  opening  entry  of  the  subsequent  exercise,  but  with  the  net  result 
obtained  by  balancing  the  cash  items  in  the  entire  memorandum  in  parenthesis. 

Note  3.  The  student  may  have  noticed  that  the  inventory  given  at  the  close  of  any 
exercise  of  a  set  is  the  same  as  that  given  for  the  corresponding  account  in  the  opening 
memorandum  of  the  next  exercise.  This  being  the  case  also  in  the  subsequent  sets,  the 
Inventories  will  be  omitted  at  the  close  of  each  exercise  of  a  set  except  the  last,  and  can  be 
obtained  from  the  opening  memorandum  of  the  next  exercise.  If  no  item  appears  in  this 
memorandum  for  some  particular  account  showing  a  profit  or  a  loss,  it  is  to  be  inferred 
that  there  is  no  inventory  for  that  account  in  the  preceding  exercise. 

Suggestion.  In  this  set,  at  least,  the  student  should  balance  the  cash-book  at  the  end 
of  each  exercise  even  though  he  does  not  close  the  ledger  so  often.  The  cash-book  is  now 
the  new  thing,  and  he  should  learn  to  balance  it  correctly. 

Exercise  1 
January,  190-. 

1.  Began  business  with  cash,  $8000. 

2.  Bought  merchandise  for  cash,  $2700. 

3.  Sold  merchandise  for  cash,  $420.60. 

4.  Lent  cash  on  note,  $1200. 

5.  Sold  merchandise  for  cash,  $345.25. 

6.  Paid  express  charges  in  cash,  $9.40. 

6.    Borrowed  cash  of  L.  C.  Downs  on  account,  $425. 

8.  Sold  merchandise  for  cash,  $226.30. 

9.  Bought  merchandise  for  cash,  $340. 

10.   Received  cash  for  note,  $1200  ;  for  interest  on  the  same,  $4.28. 
Merchandise  inventory.     See  Note  3. 

Exercise  2 

(11.   Began  business  with  cash,  $7997.03.    Bought  merchandise  for  cash,  $2050.     Bor- 
rowed cash  of  L,  C.  Downs  on  account,  $425.) 

12.  Lent  cash  on  note,  $920. 

13.  Sold  merchandise  to  Calvin  Storms  for  cash,  $142.20. 
15.  Bought  merchandise  of  Bowser  &  Co.  for  cash,  $375. 
15.   Borrowed  cash  of  L.  C.  Downs  on  account,  $360. 


The  Cash-Book  71 

January,  190-. 

16.  Paid  for  telegram,  cash,  $1.45. 

17.  Paid  cash  for  painting  store,  $22.50. 

18.  Sold  merchandise  for  cash,  $84.20. 

19.  Paid  L.  C.  Downs  cash  on  account,  $250. 

20.  Sold  merchandise  for  cash,  $238.90. 

Exercise  3 

(22.  Began  business  with  cash,  $8013.38.  Lent  cash  on  note,  $920.  Borrowed  cash 
of  L.  C.  Downs  on  account,  $535.     Bought  merchandise  for  cash,  $2000.) 

23.  Bought  office  safe  for  cash,  $425.     [Debit  expense.] 

24.  Sold  merchandise  for  cash,  $510.80. 

25.  Received  cash  for  interest,  $16.25. 

26.  Paid  cash  for  stationery,  $9.25. 

27.  Sold  merchandise  to  Joseph  Whitson  for  cash,  $84.75. 
27.  Paid  L.  C.  Downs  cash  for  balance  due  him  on  account. 

29.  Received  cash  in  part  payment  of  note,  $500  ;  for  interest  on  same,  $1.48. 

30.  Paid  clerk  hire  in  cash,  $35. 

Exercise  4 

Tebruary,  190-. 

(1.  Began  business  with  cash,  $7982.41.     Bought  merchandise  for  cash,  $1400,  and 
office  safe,  $425.     Lent  cash  on  note,  $420.) 

1.  Paid  rent  of  store  in  advance  in  cash,  $30. 

2.  Sold  merchandise  for  cash,  $194.50. 

3.  Borrowed  cash  on  my  note,  $320. 

5.  Paid  cash  for  set  of  books,  $14.50. 

6.  Lent  Edward  Mitchell  cash  on  account,  $500. 

7.  Received  cash  on  note  due,  $420  ;  for  interest  on  same,  $6.45. 

8.  Sold  merchandise  for  cash,  $239.20. 

9.  Bought  merchandise  for  cash,  $650. 
10.  Paid  freight  in  cash,  $16.30. 

Exercise  5 

(12.  Began  business  with  cash,  $7901.76.  Bought  merchandise  for  cash,  $1600,  and 
office  safe,  $415.  Borrowed  cash  on  note,  $320.  Lent  Edward  Mitchell  on 
account,  cash,  $500.) 

12.  Sold  merchandise  for  cash,  $220. 

13.  Edward  Mitchell  paid  cash  on  account,  $250. 

14.  Paid  cash  for  interest  due  on  note,  $7.40. 

15.  Sold  merchandise  for  cash,  $417.60. 

16.  Borrowed  cash  of  L.  C.  Downs  on  account,  $200. 

17.  Paid  cash  for  stamps,  $10.15. 

19.  Edward  Mitchell  paid  cash  for  balance  due  on  account. 

20.  Paid  L.  C.  Downs  cash  on  account,  $50. 

Exercise  6 

<21.  Began  business,  investing  cash,  $8016.81.  Bought  office  safe  for  cash,  $410  ;  mer- 
chandise, $1100.  Borrowed  cash  on  note,  $320,  and  of  L.  C.  Downs  on  account, 
$150.) 


72 


Comprehensive   Bookkeeping 


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74  Comprehensive  Bookkeeping 

February,  190-. 

21.  Bought  merchandise  for  cash,  $825. 

22.  Borrowed  cash  on  note,  |600. 

23.  Sold  merchandise  for  cash,  $368.25. 

24.  Paid  L.  C.  Downs  on  account,  cash,  $80. 
26.    Paid  sundry  expenses  in  cash,  $34.95. 

26.  Paid  on  note,  cash,  $300  ;  for  interest  on  same,  $8.34. 

27.  Sold  merchandise  for  cash,  $129.50. 

28.  Fire  in  store  damaged  goods  :   received  from  insurance  company,  cash,  $250. 

Sold  entire  stock  remaining  at  auction,  for  cash,  $528.90.     Sold  office  safe  for 
cash,  $300. 

SET   IV   B.     CASH-BOOK   TRANSACTIONS 

Exercise  1 
February,  190-. 

1.  Student  began  business  with  cash,  $5000. 

2.  Bought  of  B.  W.  Smith  for  cash,  invoice  of  merchandise,  $890. 

3.  Sold  J.  C.  Enright  for  cash,  10  yd.  blue  cashmere  at  $1 ;  15  yd.  black  satin  at 

$1.20  ;  12  yd.  Henrietta-cloth  at  $2.25. 
3.  Lent  cash  to  J.  P.  White  on  note  at  12  days,  with  interest,  $1800. 
6.   Sold  T.  M.  Smiley  for  cash,  15  yd.  Henrietta-cloth  at  $2,25  ;  3  yd.  black  crape 

at  $4.50 ;  3  doz.  ladies'  Lisle  thread  hose  at  $6  ;  2  doz.  ladies'  silk  hose  at 

$12.50. 

6.  Paid  freight  in  cash,  $14.50. 

7.  Sold  H.  R.  Mackey  for  cash,  20  yd.  blue  brocade  silk  at  $1.40  ;  15  yd.  black  satin 

at  $1.20  ;  2|  doz.  ladies'  silk  hose  at  $12.50. 

8.  Bought  of  B.  W.  Smith  for  cash,  invoice  of  merchandise,  $570. 

9.  Paid  freight  and  drayage  in  cash,  $12.60. 

10.   Received  cash  for  interest  due  on  note  of  3rd  inst. 
Inventories.    See  Note  3,  Set  IV  A. 

Exercise  2 

(10.  S.  N.  Newton  began  business  with  cash,  $5012.-50.  Bought  merchandise  for  cash, 
$1275.    Lent  cash  on  note,  $1800.)     [See  Note  2,  Set  IV  A.] 

12.  Sold  T.  M.  Smith  for  cash,  50  yd.  blue  brocade  silk  at  $1.40  ;  40  yd.  Henrietta- 
cloth  at  $2.25  ;  2  pes.  sheeting,  92  yd.,  at  24^  ;  30  yd.  Irish  linen  at  65^  ;  4  doz. 
ladies'  silk  hose  at  $12.50. 

13o  Lent  cash  to  C.  A.  Culver  on  account,  $725. 

14.  Paid  cash  for  stationery,  etc.,  $6.75. 

15.  Sold  J.  C.  Enright  for  cash,  20  yd.  black  cashmere  at  $1.20  ;  25  yd.  black  silk  at 

$1.50  ;  9  yd.  brocade  velvet  at  $4.25. 
15.  J.  P.  White  paid  note  of  3rd  inst.  in  cash  and  balance  of  interest  due.     [See  10th 

inst.] 
17.   C.  A.  Culver  paid  cash  on  account,  $110. 
17.   Sold  J.  S.  Colvin  for  cash,  3  pes.  sheeting,  135  yd.,  at  24^  ;  50  yd.  Irish  linen 

at  65^  ;  25  yd.  black  cashmere  at  $1.20  ;  40  yd.  blue  cashmere  at  $1. 

19.  Sold  B.  M.  Blair  for  cash,  25  yd.  black  satin  at  $1.50. 

20.  Paid  rent  of  store  in  cash,  $18. 


The  Cash-Book  75 

_,  ,  ,nA  Exercise  3 

February,  190-. 

(20.  J.  C.  Davis  began  business,  investing  cash,  $4997.98.    Bought  merchandise  for 

cash,  ^760.    Lent  C.  A,  Culver  cash  on  account,  $615.) 

20.  Bought  office  safe  for  cash,  $275. 

21.  Lent  cash  to  G.  C.  Mast  on  note  at  30  days,  with  interest,  $1200. 

22.  Sold  H.  S.  Ball  for  cash,  120  yd.  black  cashmere  at  $1.20  ;  150  yd.  blue  cashmere 

at  $1  ;  75  yd.  brocade  velvet  at  $4.25. 

23.  C.  A.  Culver  paid  cash  on  account,  $175. 

24.  Bought  of  B.  W.  Smith  for  cash,  invoice  of  merchandise,  $325. 
26.  Paid  freight  and  drayage  in  cash,  $12.75. 

26.  Sold  B.  M.  Blair  for  cash,  80  yd.  Irish  linen  at  67^ ;  90  yd.  brocade  velvet  at 

$4.50  ;  25  yd.  black  satin  at  $1.50 ;  40  yd.  brovra  cashmere  at  $1.20. 

27.  Paid  sundry  expenses  in  cash,  $15.40. 

28.  Received  cash  for  interest  due  on  note  of  21st  inst'. 

T.T         r.     -,r^t^  EXERCISE    4 

March,  190-. 

(1.  Geo.  E.  Rose  began  business  with  cash,  $5043.08.  Bought  office  safe  for  cash, 
$275.  Lent  C.  A.  Culver  cash  on  account,  $440.  Lent  G.  C.  Mast  cash  on 
note,  $1200.) 

2.  Lent  J.  V.  Clark  cash  on  note  at  30  days,  with  interest,  $800. 

3.  Bought  of  B.  W.  Smith  for  cash,  invoice  of  merchandise,  $625. 
3.   Lent  M.  A.  Bishop  cash  on  account,  $500. 

5.  Borrowed  cash  of  D.  H.  Townsend  on  note  at  15  days,  with  interest,  $700. 

6.  Sold  B.  G.  Camp  for  cash,  20  yd.  black  cashmere  at  $1.25  ;  9  yd.  brocade  velvet  at 

$4.50  ;  8  pr.  ladies'  Lisle  thread  hose  at  80^. 

7.  C.  A.  Culver  paid  cash  on  account,  $160. 

8.  Paid  freight  and  drayage  in  cash,  $18.90. 

9.  Sold  J.  C.  Enright  for  cash,  16  yd.  black  silk  at  $1.40 ;  8  yd.  black  cashmere  at 

$1.15  ;  7  pr.  ladies'  silk  hose  at  $1.75. 
10.   M.  A.  Bishop  paid  cash  on  account,  $175. 

12.  Bought  invoice  of  merchandise  of  J.  R.  Littell  for  cash,  $530. 

13.  Sold  U.  H.  Axline  for  cash,  60  yd.  Irish  linen  at  67^. 

14.  Paid  freight  and  drayage  in  cash,  $16.25. 

15.  Received  cash  for  interest  due  on  note  of  21st  ult.  and  on  note  of  2nd  inst.     [See 

February  28.] 

15.  Paid  interest  due  on  note  of  5th  inst.  in  cash. 

Exercise  5 

(15.  Student  began  business  with  cash,  $1747.44.  Bought  for  cash,  merchandise, 
$1075  ;  office  safe,  $260.  Borrowed  cash  on  note,  $700.  Lent  cash  on  notes, 
$2000,  and  C.  A.  Culver  on  account,  $280.) 

16.  Lent  cash  to  H.  C.  Tompkins  on  note  at  10  days,  with  interest,  $750. 

17.  Sold  A.  A.  McBride  for  cash,  40  yd.  black  cashmere  at  $1.25  ;  50  yd.  brown  cash- 

mere at  $1.20  ;  45  yd.  black  silk  at  $1.50  ;  18  yd.  brocade  velvet  at  $4.50. 

19.  Lent  M.  A.  Bishop  cash  on  account,  $490. 

20.  Received  cash  of  C.  A.  Culver  on  account,  $150. 

20.  Paid  note  of  5th  inst.  and  interest  accrued  since  15th  in  cash. 

21.  Sold  H.  S.  Ball  for  cash,  40  yd.  cassimere  at  $2.75  ;  14  yd.'fiavy  blue  cloth  at  $5  ; 

4  Marseilles  quilts  at  $4.75. 


76  Comprehensive  Bookkeeping 

March,  190-. 

22.  Paid  gas  bill  in  cash,  $12.50. 

23.  G.  C.  Mast  paid  note  of  21st  ult.  in  cash  and  balance  of  interest  due.     [See 

March  15.] 

24.  Received  cash  of  M.  A.  Bishop  on  account,  $250. 

20.   Sold  L.  M.  Hadden  for  cash,  8^  yd.  black  cloth  at  $6  ;  20  yd.  cassimere  at  $2.75  ; 
25  yd.  navy  blue  cloth  at  $5  ;  50  yd.  brown  silk  at  $1.25. 

26.  Note  of  16th  inst.  and  interest  due  to-day  have  been  paid  in  cash. 

27.  Paid  cash  for  rent  of  store,  $18. 

30.  Paid  sundry  expenses  in  cash,  $9.25. 

31.  Received  cash  for  interest  accrued  since  the  15th  on  note  of  2nd. 
31.   Sold  L.  M.  Hadden  for  cash,  60  yd.  bleached  damask  at  90^. 
Inventories  :  merchandise,  $400  ;  office  safe,  $200. 

Balances  :  cash,  $3012.09;  B.  R.,  $800 ;  C.  A.  Culver,  Dr.,  $130. 


TRANSACTIONS  INVOLVING   A   PART   PAYMENT   IN   CASH 

When  the  cash-book  and  the  journal  are  used  as  principal  books, 
transactions  which  involve  a  part  payment  in  cash  may  be  treated  in 
different  v^ays.  For  an  example,  suppose  we  sell  merchandise  to 
Samuel  Whitson,  $460,  receiving  cash  for  one-half,  the  balance  to  be  on 
account.  The  simplest  metliod,  and  the  only  one  explained  here,  is  to 
debit  Samuel  Whitson  in  the  journal  for  the  entire  purchase  ;  then,  in 
the  cash-book,  to  credit  him  for  the  amount  paid,  thus : 

Journal  Debit  Side  of  Cash-Book 

Samuel   Whitson         460.00  Samuel   Whitson         230.00 

Mdse.  460.00 

In  transactions  similar  to  that-  of  June  9,  Exercise  1,  Set  V  A,  the 
entry  should  be  made  only  in  the  cash-book,  and  it  would  be  as 
follows : 

Debit  Side  of  Cash-Book  Credit  Side  of  Cash-Book 

Bills  Receivable  200.00  Discount  8.60 

DISCOUNT 

Discount  is  the  use  of  money,  and  is  paid  for  before  the  money  is 
used. 

This  item  is  treated  in  the  same  manner  as  interest.  It  also  will 
require  some  care  in  applying  the  rule  for  journalizing.  The  follow- 
ing may  helj)  the  student  in  avoiding  errors:  remember  that  notes 
must  always  be  debited  and  credited  for  their  face  value.     There  is 


Discount  77 

but  little  difficulty  in  deciding  how  much  cash  has  been  received  or 
paid.  Then  discount  must  be  debited  or  credited  with  the  difference 
and  so  placed  as  to  make  the  debits  and  credits  equal.  Thus  the  cor- 
rect entry  could  almost  be  decided  without  any  rule. 

Illustration.  Suppose  we  hold  a  note  of  -1500  which  is  paid  in 
cash,  less  a  discount  of  flO.  Evidently  we  receive  only  $490  in  cash  ; 
and  as  bills  receivable  must  be  credited  for  $500,  the  face  of  the  note, 
we  debit  discount  for  the  ilO,  thus  making  the  sum  of  the  debits  equal 

the  credit.  \  \ 

Cash  490.00 

Discount  10.00 

Bills  Receivable  500.00 

Interest  and  discount  are  frequently  posted  to  the  same  account  in 
the  ledger.  If  it  is  desired  to  do  this,  and  it  is  just  as  well  in  these 
exercises,  the  title  Interest  and  Discount  should  be  used  for  the 
account. 

SET  V  A.    DISCOUNT   TRANSACTIONS   INTRODUCED 

Suggestions.  1.  If  the  student  is  g^ble  by  this  time  to  close  the  ledger  correctly,  he' 
may  be  allowed  to  combine  two  or  more  exercises  into  one  ;  that  is,  he  may  post  two  or 
more  exercises  and  make  but  one  closing  of  the  ledger  instead  of  closing  it  after  posting 
•each  exercise. 

2.  If  Set  IV  has  been  written,  the  cash-book  and  the  journal  may  be  used  as  original, 
books  in  this  set.  All  cash  transactions  should  be  entered  in  the  cash-book  ;  all  others  in 
the  journal-day-book. 

Posting.  It  will  be  better  to  post  all  of  one  book  before  commencing  the  posting  of 
the  other.  It  is  true,  the  dates  will  not  come  in  regular  order  in  this  way,  but  that  is  not 
material.  To  designate  in  the  ledger  which  book  an  amount  comes  from,  the  initial  of  the 
book  may  be  put  in  the  item  column  ;  as,  J.  or  C.  B. 

Exercise   1 
June,  190-. 

1.  Began  business  without  capital. 

1.  Borrowed  cash,  giving  three  notes  of  $1000  each,  $3000. 

2.  Bought  merchandise  of  D.  H.  Sanders  on  account,  §1500. 

3.  Sold  merchandise  to  Graham  Bell  on  account,  $400. 

4.  Sold  merchandise,  $800.     Received  cash,  -$600  ;  note  for  balance. 

6.  Paid  D.  H.  Sanders  cash  on  account,  81000,  and  gave  him  note  for  $200. 

-9.   Received  cash  for  note,  less  discount :  face  of  note,  $200  ;  discount,  $3..60. 

^  12.   Paid  note  in  cash,  less  discount:  face  of  note,  $1000  ;  discount,  $56.20. 
13.    Sold  merchandise  to  Graham  Bell  on  account,  $600. 
15.  Paid  note  in  cash,  less  discount:  face  of  note,  $200;  discount,  $9.70. 
Merchandise  inventory.     See  Note  3,  page  70. 


78  COMPKEHENSIVE    BOOKKEEPING 

Exercise  2 
June,  190-. 

(16.    Began  business  with  merchandise,  $100;  cash,  $1662.30.) 

17.  Bought  merchandise  of  D.  H.  Sanders,  $1200.     Paid  cash,  $600;  gave  note  for 

$400  ;  balance  on  account. 

18.  Sold  merchandise  to  Graham  Bell,  $500.     Eeceived  note  for  $300;  balance  on 

account. 

19.  Sold  merchandise  for  cash,  $480. 

20.  Paid  freight  bills  in  cash,  $46.10. 

23.  Received  cash  on  note,  less  discount :  face  of  note,  $300 ;  discount,  $9.40. 

24.  Sold  merchandise  to  R.  P.  Redfield  on  account,  $300. 

25.  Paid  note  and  interest  in  cash  :  face  of  note,  $400 ;  interest,  $5.12. 
27.  Graham  Bell  gave  me  note  on  account,  $100. 

29.  Sold  merchandise  for  cash,  $400. 

30.  Received  cash  for  note,  less  discount:  face  of  note,  $100;  discount,  $4.15. 

^  ,     _^  Exercise  3 

July,  190-. 

(1.    Began  business  with  cash,  $1877.53.) 

2.  Bought  merchandise  of  D.  H.  Sanders,  $1000.     Gave  note  for  $700  ;  balance  on 

account. 

3.  Sold  merchandise,  $400,  receiving  note  for  $300  ;  cash  for  balance. 

5.  Sold  merchandise  to  R.  P.  Redfield  on  account,  $280. 

6.  Bought  merchandise  of  S.  J.  Wilson  on  my  note,  $720. 

8.  Paid  cash  for  set  of  books  for  use  in  store,  $10.50.  * 

9.  R.  P.  Redfield  paid  me  cash  on  account,  $200. 

10.   Paid  note  in  cash,  less  discount :  face  of  note,  $700  ;  discount,  $12.25. 

12.  Sold  merchandise  on  note,  $640. 

13.  Sold  merchandise  to  R.  P.  Redfield  on  account,  $140. 

15.  Paid  note  in  cash,  less  discount :  face  of  note,  $720  ;  discount,  $9.40. 

Exercise  4 

(16.  Began  business  with  cash,  $768.68  ;  merchandise,  $500  ;  notes,  $940.) 

17.  Sold  merchandise  to  Graham  Bell  on  account,  $260. 

18.  Bought  merchandise  of  D.  H.  Sanders  on  account,  $890. 

19.  Received  cash  on  note,  less  discount :  face  of  note,  $640  ;  discount,  $8.30. 

20.  Graham  Bell  gave  me  on  account,  note,  $150 ;  cash,  $100. 

23.  Gave  D.  H.  Sanders  note  to  apply  on  account,  $350. 

24.  Paid  sundry  expenses  in  cash,  $18.20. 

25.  Bought  store  and  lot  for  $1300.    Paid  cash,  $500  ;  gave  note  for  balance. 

29.  Paid  note  in  cash,  less  discount :  face  of  note,  $350  ;  discount,  $5.90. 

30.  Received  cash  of  Graham  Bell  to  balance  account. 

Exercise  5 
August,  190-. 

(1.  Began  business  with  merchandise,  $1500  ;  real  estate,  $1300  ;  notes,  $450.) 

2.  Sold  merchandise  to  M.  A.  Stevenson  on  his  note,.  $460. 

3.  Received  cash  on  note,  less  discount :  face  of  note,  $300  ;  discount,  $4.50. 

4.  Sold  merchandise  to  R.  P.  Redfield,  $400.     Received  note  for  $250 ;  balance  on 

account. 

5.  Bought  merchandise  of  F.  C.  Daniels  on  my  note,  $920. 


Discount  79 

August,  190-. 

8.   Received  cash  on  note,  less  discount :  face  of  note,  $150  ;  discount,  $2.80. 
10.    Paid  gas  bill  in  cash,  $20. 

12.  Sold  merchandise  to  E.  P.  Redfleld  on  account,  $275. 

13.  Sold  merchandise  for  cash,  $800. 

15.  Prepaid  note  in  cash,  less  discount :  face  of  note,  $920  ;  discount,  $13,40. 

Exercise  6 

(16.  Began  business  with  merchandise,  $400  ;  real  estate,  $1375  ;  notes,  $710.) 

17.  Sold  store  and  lot  for  cash,  $1420. 

18.  Sold  merchandise  to  Graham  Bell  on  account,  $240. 

19.  Received  cash  on  note,  less  discount :  face  of  note,  $460  ;  discount,  $7.50. 

20.  Bought  merchandise  of  D.  H.    Sanders,  $900.    Paid  cash,  $700 ;  balance  on 

account. 
25.   Graham  Bell  gave  me  on  account,  cash,  $100  ;  note  for  balance  due. 
27.    Gave  D.  H.  Sanders  note  to  balance  accou|;^t. 
29.    Sold  merchandise  for  cash,  $380. 

31.   Paid  note  of  27th  in  cash,  less  discount :  face  of  note,  $ ;  discount,  $9.40. 

Merchandise  inventory,  $280. 


SET   V  B.     DISCOUNT   TRANSACTIONS   INTRODUCED 

Selling  Price   List    (per    yard).      Body  Brussels,    $1.33|;    ingrain,   75 j2^;    lining,    10)?; 
moquette,  $1.40  j  oil  cloth,  45^  ;  tapestry  Brussels,  87^f  ;  Wilton,  $2.50. 

,,     ,       ^  Exercise  1 

March,  190-. 

1.    Marcellus  Piatt  began  business  with  cash,  $2500  ;  an  account  against  H.  W.  Jones, 

$490. 
1.    Bought  of  John  Frazier  invoice  of  merchandise,  $1635.     Gave  in  part  payment 

note  at  60  days  for  $800  ;  balance  on  account. 
3.    Sold  H.  W.  Jones  60  yd.  body  Brussels ;  75  yd.  ingrain ;  100  yd.  tapestry  Brussels. 

Received  in  part  payment  note  at  30  days,  with  interest,  $200 ;  balance  on 

account. 
3.    Sold  L.   H.  Armstrong  on  account,   150  yd.   ingrain;  225  yd.  lining;   180  yd. 

moquette ;  90  yd.  oil  cloth. 
6.    Paid  freight  and  drayage  in  cash,  $23.30. 

6.  Paid  note  of  1st  inst.,  favor  John  Frazier,  in  cash,  less  discount  to  maturity. 

7.  Bought  office  safe  for  cash,  $375. 

8.  Sold  A.    S.  Phillips  on  his  note  at  60  days,  75  yd.  tapestry  Brussels ;  60  yd. 

moquette  ;  125  yd.  oil  cloth  ;  80  yd.  Wilton. 
8.    Sold  H.  W.  Jones  on  account,  80  yd.  body  Brussels;   250  yd.  lining;  175  yd. 

tapestry  Brussels. 
10.   L.  H.  Armstrong  gave  note  at  30  days  to  balance  account. 

Exercise  2 

(12.  W.  W.  Reed  began  business  with  assets  as  follows:  merchandise,  $500;  office 
safe,  $375  ;  cash,  $1309.03  ;  notes  on  hand,  $1033.38  [see  March  3,  8,  and  10]  > 
an  account  against  H.  W.  Jones,  $798.55.)  -  i 


80  Comprehensive  Bookkeepikg 

March,  190-. 

12.  Sold  S.  F.  Bradley  on  his  note  at  15  days,  with  interest,  40  yd.  ingrain;  80  yd. 

moquette. 

13.  Received  cash  of  A.  S.  Phillips  for  note  of  8th  inst.,  less  discount  to  maturity. 

14.  Bought  of  John  Frazier  invoice  of  merchandise,  $1000.     Gave  him  note  at  60 

days,  $500;  cash,  $300;  balance  on  account. 

15.  Sold  H.  W.  Jones  on  account,  90  yd.  moquette;  85  yd.  oil  cloth ;  60  yd.  tapestry 

Brussels. 

16.  Paid  freight  bill  in  cash,  $12.75. 

17.  Paid  note  of  14th  inst.  in  cash,  less  discount  to  maturity. 

19.  L.  H.  Armstrong  prepaid  his  note  of  10th  inst.  in  cash,  less  discount  to  maturity. 

20,  H.  W.  Jones  gave  on  account,  cash,  $100  ;  note  at  30  days,  with  interest,  §500. 

20.  Paid  cash  for  stationery,  $17.30. 

Exercise  3 

(21.  W.  W.  Reed  began  business  with  the  following  assets  :  merchandise,  $1190.50; 
office  safe,  $375;  cash,  $1411.89;  notes,  $842  [see  March  3,  12,  and  20]; 
H.  W.  Jones  owed  on  account,  $415.80.) 

21.  Sold  L.  H.  Armstrong  on  account,  100  yd.  oil  cloth  ;  200  yd.  tapestry  Brussels. 

23.  H.  W.  Jones  gave  on  account,  note  at  30  days,  $400  ;  cash  to  balance  account. 

24.  Sold  B.  C.  Wheeler  on  note  at  30  days,  with  interest,  65  yd.  ingrain ;  50  yd. 

Wilton. 
24.    Sold  L.  H.  Armstrong  87  yd.  lining;  45  yd.  moquette;  90  yd.  oil  cloth;  20  yd. 
Wilton.     Received  cash,  $50 ;  balance  on  account. 

26.  H.  W.  Jones  prepaid  note  of  23rd  inst.  in  cash,  less  discount. 

27.  Received  cash  for  note  of  12th  inst.  and  for  interest  on  same. 

29.  Sold  L.  H.  Armstrong  on  account,  120  yd.  body  Brussels  ;  125  yd.  ingrain. 

30.  Bought  bankrupt  stock  of  merchandise,  paying  cash,  $1960. 

31.  "Paid  clerk  hire  in  cash,  $25;  sundry  expenses  $32.75. 

.     .,   ,^^  Exercise  4 

April,  190-. 

(2.  Marcellus  Piatt  began  business  with  assets  as  follows  :  merchandise,  $2375  ;  office 

safe  valued  at  $356.25 ;  notes,  $873.75   [see  March  3,  20,  and  24]  ;  account 

against  L.  H.  Armstrong,  $585.95.) 

2.    Sold  H.  W.  Jones  on  account,  150  yd.  ingrain  ;  200  yd.  moquette  ;  190  yd.  tapestry 

Brussels ;  25  yd.  Wilton. 

2.  Received  cash  of  H.  W.  Jones  for  note  of  3rd  ult.  and  interest. 

3.  L.  H.  Armstrong  gave  note  at  30  days  on  account,  $325. 

6.    Sold  T.  W.  Campbell  on  account,  400  yd.  lining ;  275  yd.  oil  cloth. 

6.  Received  cash  for  note  of  3rd  inst.,  less  discount. 

7.  Paid  cash  for  labor  about  store,  $10.50. 

9.   Sold  J.  W.  Gordon  on  his  note  at  15  days,  225  yd.  body  Brussels ;  160  yd.  ingrain  ; 
210  yd.  moquette ;  175  yd.  oil  cloth ;  25  yd.  Wilton. 

10.  Paid  electric  light  bill  in  cash,  $15. 

11.  Sold  T.  W.  Campbell  on  account,  50  yd.  ingrain ;  140  yd.  lining;  50  yd.  tapestry 

Brussels. 

12.  H.  W.  Jones  paid  cash  on  account,  $375. 

13.  Sold  T.  W.  Campbell  40  yd.  ingrain ;  250  yd.  oil  cloth ;  30  yd.  Wilton.     He  paid 

cash  on  account,  $320. 
13.    Paid  cash  for  printing,  $15. 


Opening  Entry  81 

April,  190-. 

14.    Sold  L.  H.  Armstrong  on  account,  60  yd.  body  Brussels;  80  yd.  ingrain;  50  yd. 
tapestry  Brussels. 

16.  Sold  for  cash  90  yd.  oil  cloth ;  100  yd.  tapestry  Brussels. 

Exercise  5 

(17.  Student  began  business  with  the  following  assets:  merchandise,  $340;  ofBce 
safe  valued  at  $337.50 ;  notes,  $1529  [see  March  20  and  24  and  April  9]  ;  cash, 
$1307.04;  L.  H.  Armstrong's  account,  $444.70.) 

17.  Bought  of  John  Frazier  invoice  of  merchandise,  $875.    Gave  him  note  at  30  days, 

$525  ;  balance  on  account. 

17.  Received  cash  for  note  of  9th  inst.,  less  discount. 

18.  Sold  T.  W.  Campbell  on  account,  90  yd.  body  Brussels ;  70  yd.  ingrain ;  145  yd. 

lining. 

19.  Received  cash  for  note  of  20th  ult.  and  interest. 

20.  Paid  note  of  17th  inst.  in  cash,  less  discount. 

21.  Bought  of  John  Frazier  on  account,  merchandise,  $460. 

23.   Sold  A.  S.  Phillips  on  note  at  30  days,  120  yd.  moquette ;  100  yd.  tapestry  Brus- 
sels ;  75  yd.  Wilton. 

23.  B.  C.  Wheeler's  note  of  24th  ult.,  with  interest,  has  been  paid  in  cash. 

24.  Gave  John  Frazier  note  at  30  days  on  account,  $500. 

25.  L.  H.  Armstrong  paid  cash  on  account,  $150,  and  gave  note  at  30  days,  $275. 

26.  Paid  freight  bill  in  cash,  $17.45. 

28.    Sold  L.  H.  Armstrong  on  account,  75  yd.  ingrain ;  415  yd.  lining. 

30.   L.  H.  Armstrong  prepaid  note  of  25th  inst.  in  cash,  less  discount. 

30.    Paid  clerk  hire  in  cash,  $35  ;  sundry  expenses,  $18.30. 

Inventories :"  merchandise,  $810  ;  ofifice  safe  valued  at  $325. 

Balances  :  cash,  $2668.87  ;  B.  R.,  $443  ;  B.  P.,  $500  ;  L.  H.  Armstrong,  Dr.,  $117.45. 

LIABILITIES   IN   THE   OPENING   ENTRY  EXPLAINED 

We  have  already  learned  that  the  proprietor  debits  his  assets  and 
credits  himself  for  an  equal  sum  at  the  time  of  beginning  business; 
hence  if  he  has  any  liabilities  at  this  time,  to  be  consistent  with  their 
opposite  nature,  he  debits  himself  for  them  and  credits  the  liabilities. 

Illustration.  Suppose  that  the  student  is  the  proprietor  and 
opens  a  set  of  books,  having  cash  $2000,  and  that  W.  M.  Stevens  owes 
him  on  account,  $500,  and  that  he  owes  on  notes,  I50Q,  and  J.  C. 
Wilson  on  account,  $200.  There  are  two  ways  of  recording  this. 
One  is  to  debit  the  assets  and  to  credit  the  liabilities ;  then  credit 
the  proprietor  for  the  difference,  or  the  net  investment,  thus: 
Cash  -  .       2000.00 

W.  Ml  Stevens  500.00 

Bills  Fay.  500.00 

J.  0.  Wilson  200.00 

Student  1800.00 


82  Comprehensive  Bookkeeping 

The  other  plan  is  to  make  two  separate  entries,  —  one  for  the  assets, 
the  other  for  the  liabilities,  thus : 

For  the  Assets  For  the  Liabilities 

Cash                    2000.00  Student               700.00 

W.  M.  Stevens      500.00  J.  C.  Wilson          200.00 

Student                   2500.00  Bills  Pay.             500.00 


AN   EXERCISE   ON   OPENING  ENTRIES, 

For  practice  on  opening  entries,  the  student  may  journalize  the  following  exercises, 
writing  each  of  them  by  both  the  methods  as  illustrated. 

1.  Began  business  with  assets  and  liabilities  as  follows: — Assets:  cash,  f  1200;  J. 

S.  White  owed  me  on  account,  ^360.  Liability  :  I  owed  Munson  &  Co.  on 
account,  $240. 

2.  Began  business  with  the  following  assets  and  liabilities  :  — Assets:  cash,  $2220.97  ; 

notes  on  hand,  $700.   Liabilities:  notes  outstanding,  $1980;  accrued  interest,  97c. 

3.  Had  at  beginning  business  the  following  assets  and  liabilities  :  —  Assets :  notes  on 

hand,  $1140;  store  and  lot,  valued  at  $2000;  an  account  against  Samuel 
Whitson  for  $740.  Liabilities :  notes  outstanding,  $1800  ;  I  owed  Munson  & 
Co.  on  account,  $050. 

4.  Assets  at  beginning    business   were  :  real  estate  valued  at  $2200 ;  an  account 

against  Samuel  "Whitson,  $960 ;  notes  on  hand,  $1190.  Liability  :  I  owed 
Munson  &  Co.  on  account,  $3350. 

5.  Began  business  with  the  following :  —  Assets :  merchandise,  $2000  ;  J.  S.  AVhite 

owed  me  on  account,  $450 ;  Samuel  Whitson  owed  me  on  account,  $960. 
Liability :  I  owed  Munson  &  Co.  on  account,  $300. 

6.  Had  at  beginning  business  the  following  assets  and  liabilities  :  —  Assets :  cash, 

$2010.59  ;  an  account  against  J.  S.  White,  $172  ;  office  safe,  $375.  Liabilities  : 
notes  outstanding,  $575  ;  accrued  interest,  $7.20. 

7.  Began  business  with  assets  and  liabilities  as  follows  :  —  Assets :  cash,  $2000  ;  M.  C. 

Brown  owed  on  account,  $480.     Liability  :  owed  M.  V.  Hall  on  account,  $720. 

8.  D.  C.  Campbell  began  business  with  the  following  assets  and  liabilities :  —  Assets  : 

merchandise,  $600  ;  office  safe,  $425  ;  cash,  $1974.31 ;  M.  C.  Brown's  account, 
$105.     Liabilities  :  note  outstanding,  $800  ;  M.  V.  Hall's  account,  $720. 

9.  J.  R.  Little  began  iDusiness  with  the  following  assets  and  liabilities  :  —  Assets  : 

merchandise,  $1050  ;  office  safe  valued  at  $420  ;  cash,  $2355.87  ;  M.  C.  Brown's 
account,  $498.  Liabilities  :  notes  outstanding,  $2300  ;  M.  V.  Hall's  account, 
$520. 

10.  J.  R.  Ramsey  commenced  business  with  assets  and  liabilities  as  follows  :  —  Assets : 

merchandise,  $908  ;  office  safe  valued  at  $410  ;  cash,  $014.17 ;  T.  C.  Smith's 
account,  $574  ;  notes  on  hand,  $563.50.  Liabilities  :  notes  outstanding,  $1025 ; 
R.  P.  Redfield's  account,  $525. 

11.  Student's  assets  and  liabilities  at  beginning  business  were  as  follows  :  —  Assets  : 

merchandise,  $686  ;  office  safe  valued  at  $400  ;  eight  city  lots  valued  at  $150 
each;  notes,  $786;  cash,  $741.18.  Liabilities:  notes,  $1575;  R.P.  Redfield's 
account,  $710. 


The  Sales  Book 


83 


PARTNERSHIPS 

The  opening  journal  entry  for  a  partnership  business  is  substantially 
the  same  as  that  for  a  single  proprietorship.  It  may  be  better,  how- 
ever, to  make  a  separate  entry  for  each  partner. 

The  profit  and  loss  account  in  the  ledger  will  be  a  little  different 
from  that  already  given.  It  should  show  the  amount  of  the  profit  or 
the  loss  to  be  transferred  to  each  partner.  A  profit  and  loss  account  is 
given  here  to  illustrate  this  new  feature.  An  examination  of  it  will  be 
sufBcient,  it  is  thought,  to  indicate  to  the  student  how  to  treat  such 
accounts. 

This  profit  and  loss  account  does  not  represent  any  work  of  the 
text-book.  If  the  profit  or  the  loss  does  not  divide  equally,  as  in  this 
case,  give  one  partner  a  cent  more  than  the  other.  Never  place  a  frac- 
tion of  a  cent  in  the  money  columns  of  a  set  of  books. 


S^^^ajlt 

dnd  c 

Ca 

61^ 

Real  Estate 
Expense 

200 

87 

30 

Mdse. 

Student^ s Net  Loss 

P.  A.  Dawes'    " 

A  To  be  in  red  ink. 

1 
1 

100 
93 
93 

23 

58 

287 

30 

287 

30 

Note.  If  it  is  desired  to  give  the  student  a  drill  on  journalizing  opening  entries  for 
partnerships,  it  may  be  had  by  using  the  opening  memoranda  of  each  exercise  in  the  next 
one  or  two  sets. 


THE  SALES  BOOK  OR  SALES  JOURNAL 

The  %ales  look  is  a  book  in  which  sales  of  merchandise  are  recorded. 
By  using  such  a  book  much  labor  is  saved  in  posting,  as  the  footings 
of  the  columns  can  be  carried  forward  from  page  to  page  until  the 
end  of  the  week  or  month,  and  merchandise  credited  in  the  ledger  for 
the  total.  Of  course,  merchandise  sales  are  not  then  recorded  in  the 
journal. 

In  posting  this  book,  each  person  is  d/^bited  in  the  ledger  for  the 
amount  of  his  purchase.  When  this  book  is  used  in  connection  with 
the  journal,  or  with  the  journal  and  cash-book,  as  in  school  practice,  it 
is  more  convenient  to  post  everything  from  one  book  before  beginning 
the  posting  of  another.     It  is  true,  the  dates  will  not  occur  in  regular 


84  Comprehensive  Bookkeeping 

order  in  the  ledger,  but  that  does  not  matter.     In  business,  however, 
the  books  should  be  kept  posted  up  to  date,  if  possible. 

The  check  mark  (y/)  opposite  S.  K.  Johnston's  name  in  the  sales 
book  which  follows,  means  that  S.  K.  Johnston  is  not  to  be  debited  in 
the  ledger  for  this  sale,  as  he  paid  cash.  Usually,  if  an  item  is  not 
to  be  posted,  it  is  better  to  check  it  at  the  time  the  record  is  made. 
The  sales  of  the  transactions  recorded  on  pages  22  and  23  would 
appear  in  the  sales  book  as  shown  in  the  illustration  which  follows. 
The  ledger  pages  used  in  checking  are  as  they  would  be,  if  this 
were  posted  to  the  ledger  accounts  on  pages  28-30.  The  mer- 
chandise account  in  that  ledger  would  now  appear  different,  as  it 
would  have  but  one  entry  on  the  credit  side  instead  of  six. 

SET  VI.     PARTNERSHIPS.  — EQUAL   PROFIT  AND   LOSS 

Suggestion.  In  writing  this  set,  the  sales  hook,  cash-hook,  and  journal  may  be  used. 
Record  in  the  sales  hook  all  sales  of  merchandise  ;  in  the  cash-book,  all  cash  transactions  ; 
and  all  remaining  transactions  in  the  journal. 

Exercise  1 

July,  190-. 

1.  Student  and  H.  "VV.  Speer  entered  into  partnership,  profits  and  losses  to  be  divided 
equally.  Student  invested  a  note  made  by  A.  M.  Brown,  dated  January  2  last, 
$1000  ;  accrued  interest  on  same,  $30  ;  cash,  $70.  H.  W.  Speer  invested  cash, 
$1360,  and  owed  J.  G.  Webster  on  account,  $260. 

1.  Bought  invoice  of  furniture  of  J.  G.  Webster,  $850.  Paid  cash,  $300 ;  balance 
on  account. 

3.  Sold  W.  R.  Littell  on  account,  1  marble  top  bureau,  $50  ;  1  extension  table,  $12  ; 

^  doz.  dining-room  chairs  at  $20  per  doz. 

4.  Sold  H.  W.  Pickering  on  his  note  at  20  days,  3  doz.  dining-room  chairs  at  $20  per 

doz. ;  2  doz.  rosewood  bedroom  chairs  at  $50  per  doz. ;  2  extension  tables  at  $11. 

5.  Paid  freight  in  cash,  $21. 

6.  Paid  J.  G.  Webster  cash  on  account,  $240. 

7.  Sold  W.  R.  Littell  on  account,  4  extension  tables  at  $12 ;  2  mahogany  book  cases 

at  $60  ;  2  doz.  bedroom  chairs  at  $35  per  doz. 

8.  Sold  S.  M.  White  for  casli,  1|  doz.  dining-room  chairs  at  $9  per  doz.  ;  1  bedroom 

set,  $55  ;  2  extension  tables  at  $13. 

10.    Paid  drayage  bills  in  cash,  $24.25. 

10."  ojjd  W.  R.  Baxter  2  doz.  bedroom  chairs  at  $20  per  doz. ;  3  doz.  dining-room 
chairs  r,t  $14  per  doz. ;  2  extension  tables  at  $16  ;  1  rosewood  marble  top  table, 
$22.     Received  noie  at  1j  days,  with  interest.  $125  ;  cash  for  balance. 

Exercise  2 

(10.  Student  and  H.  A.  Brown  began  a  partnership  business,  profits  and  losses  to  be 
shared  equally.  Student  invested  a  note  made  by  A.  M.  Brown,  dated  January 
2  last,  $1000  ;  accrued  interest  on  same,  $ ;  cash,  $89.88.     H.  A.  Brown 


The  Sales  Book 


85 


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86  COMPKEHENSIVE   BOOKKEEPING 

July,  190-. 

invested  notes,  $307  [see  July  4  and  10]  ;  merchandise,  .$214  ;  cash,  $860.37  ; 
an  account  against  W.  R.  Littell,  $310  ;  and  owed  J.  G.  Webster  on  account, 
$570.) 
11.    Sold  Thomas  Lynn  on  account,  1  dcz.  D.  R.  chairs  at  $12  per  doz. ;  1  extension 
table,  $14  ;  1  marble  top  bureau,  $45. 

13.  Bought  of  L.  Z.'  Emmert  an  invoice  of  furniture,  $1000.     Gave  him  note  at  20 

days,  $700  ;  balance  on  account. 

14.  H.  W.  Pickering  prepaid  note  of  4th  inst.  in  cash,  less  discount. 

14.  Sold  W.  R.  Littell  on  account,  4  extension  tables  at  $12  ;  3  doz.  D.  R.  chairs  at 

$9  per  doz. ;  2  rosewood  M.  T.  tables  at  $22. 

15.  Paid  freight  bill  in  cash,  $12.80. 

17.  Sold  W.  R.  Littell  on  account,  4  B.  R.  sets  at  $37.50 ;  3  M.  T.  bureaus  at  $22 ; 

1  book  case,  $14. 

18.  Paid  our  note  of  13th  inst.  in  cash,  less  discount. 

18.  Sold  B.  F.  Smith  on  account,  I  doz.  D.  R.  chairs  at  $4.25  per  doz. ;  1  D.  R.  table 

at  $7.50. 

19.  Paid  cash  for  stationery,  $10.50. 

20.  Sold  W.  C.  Ball  for  cash,  3  extension  tables  at  $8 ;  2  doz.  D.  R.  chairs  at  $10 

per  doz. 

Exercise  3 

(20.  Student  and  L.  C.  Colwell  entered  into  partnership,  profits  and  losses  to  be 
divided  equally.      Student  invested  notes  against  others,  $1125  [see  July  1 

and  10]  ;  accrued  interest  on  these  notes,  $ ;  cash,  $16.01  ;  account  against 

W.  R.  Littell,  $659  ;  and  owed  J.  G.  Webster  on  account,  $570.  L.  C.  Col- 
well invested  merchandise,  $825  ;  cash,  $438.39.) 

22.   Bought  store  and  lot  of  V.  M.  Mason  on  our  note  at  60  days,  with  interest,  $1200. 

24.    Gave  J.  G.  Webster  our  note  at  30  days,  with  interest,  on  account,  $550. 

24.  Sold  Thomas  Lynn  on  account,  4  doz.  D.  R.  chairs  at  $18  per  doz.  ;  3  extension 

tables  at  $13  ;  5  M.  T.  tables  at  $7. 

25.  W.  R.  Littell  gave  us  note  at  10  days  on  account,  $600. 

25.  W.  R.  Baxter  paid  note  of  10th  inst.  and  interest  in  cash. 

26.  Sold  Thomas  Lynn  on  account,  3  doz.  B.  R.  chairs  at  $4.50  per  doz.  ;  8  bedsteads 

at  $5.25  ;  8  washstands  at  $7. 

27.  Paid  gas  bill  in  cash,  $12. 

27.  Sold  B.  F.  Smith  on  account,  2  doz.  B.  R.  chairs  at  $4.50  per  doz.  ;  2  bedsteads 

at  $5.25  ;  1  washstand  at  $6. 

28.  Note  of  January  2  last,  with  interest,  has  been  paid  in  cash. 

28.  Sold  Thomas  Lynn  on  account,  I  doz.  B.  R.  chairs  at  $4.50  per  doz. ;  2  washstands 

at  $6. 

29.  W.  R.  Littell  paid  note  of  25th  inst.  in  cash,  less  discount. 
29.   Paid  dray^ge  in  cash,  $18.25. 

31.    Sold  B.  F.  Smith  on  account,  1  D.  R.  table  at  $8  ;  ^  doz.  D.  R.  chairs  at  $4.50 

per  doz.i 

*  .__  Exercise  4 

August,  190-. 

(L   Student,  L.  H.  Wishard,  and  H.  M.  Kimball  formed  a  partnership,  profits  and 

losses  to  be  shared  equally.     Student  invested  merchandise,  $650  ;  cash,  $64.21 ; 

1  If  the  ledger  is  closed  July  31,  in  strictness  the  interest  on  notes  should  be  computed 
only  to  include  that  date.  In  computing  results,  however,  the  time  has  been  made  to 
include  August  1,  so  as  to  conform  with  the  amount  in  the  opening  entry  of  Exercise  4. 


Partnership  87 

August,  190-. 

account  against  W.  K.  Littell,   $59.     L.  H.   Wishard  invested   real  estate, 
$1200  ;  cash,  $1325.94  ;   and  owed  notes  of  July  22  and  24,  $1750 ;   accrued 

interest  on  same,  .$ .i     H.  M.  Kimball  invested  cash,  $793.21  ;   and  owed 

J.  G.  Webster  on  account,  $20.) 

1.  Sold  B.  S.  Culver  on  his  note  at  30  days,  1  walnut  book  case,  $30  ;  3  doz.  D.  R. 

chairs  at  $8  per  doz.  ;  5  B.  R.  sets  at  $60. 

2.  Bought  office  safe  for  cash,  $275. 

3.  Sold  C.  F.  Crooks  on  account,  3  D,  R.  tables  at  $6  ;  2  doz.  D.  R.  chairs  at  $15 

per  doz. ;  4  walnut  book  cases  at  $30. 

4.  Paid  taxes  on  real  estate  in  cash,  $8.93. 

5.  Sold  J.  G.  Holland  1  rosewood  M.  T.  table,  $80  ;  4  extension  tables  at  $14 ;  7  doz. 

D.  R.  chairs  at  $8.25  per  doz.  ;  5  bedsteads  at  $4.50.     Received  note  at  15  days, 
with  interest,  $200  ;  cash  for  balance. 

6.  Bought  of  J.  G.  Webster  on  account,  invoice  of  furniture,  $725. 

8.  Sold  C.  F.  Crooks  on  account,  ^  doz.  D.  R.  chairs  at  $9  per  doz.  ;  3  rosewood  bed- 
steads at  $27  ;  5  M.  T.  bureaus  at  $17. 

10.  Gave  J.  G.  Webster  on  account,  note  at  30  days,  with  interest,  $700  ;  cash,  $25. 

11.  B.  S.  Culver  prepaid  note  of  1st  inst.  in  cash,  less  discount. 

11.  Sold  W.  R.  Littell  on  account,  7  B.  R.  sets  at  $40 ;  4  doz.  D.  R.  chairs  at  $9  per 

doz,  ;  3  book  cases  at  $21. 

12.  Paid  freight  and  drayage  in  cash,  $23.45. 

13.  Received  cash  of  W.  R.  Littell  on  account,  $400. 

15.   Paid  J.  G.  Webster  cash  for  balance  due  him  on  account. 

15.  Received  cash  for  interest  due  on  note  of  5th  inst. 

Exercise  5 

(15.  Student  and  D.  C.  Masters  began  a  partnership  business,  profits  and  losses  to  be 
shared  equally.  Student  invested  real  estate,  $1200  ;  office  safe,  $275  ;  account 
against  C.  F.  Crooks,  $338.50  ;  cash,  $1722.14  ;  and  owed  on  notes  outstanding, 

$2450  [see  July  22  and  24  and  August  10] ;  accrued  interest  on  these  notes,  $ . 

D.  C.  Masters  invested  note  of  10th  inst.,  $200;  cash,  $878.24.) 

16.  Bought  invoice  of  furniture  of  L.  Z.  Emmert  on  account,  $975. 

17.  Sold  C.  F.  Crooks  6  doz.  D.  R.  chairs  at  $10  per  doz. ;  4  extension  tables  at  $13  ; 

2  M.  T.  bureaus  at  $17.     Received- cash,  $50  ;  balance  on  account. 

18.  Student  withdrew  cash  for  private  use,  $225. 

19.  Sold  B.  S.  Colvin  on  his  note  at  30  days,  1  mahogany  book  case,  $40  ;  3  doz.  D.  R. 

chairs  at  $9.50  per  doz.  ;  3  tables  at  $7.20 ;  3  M.  T.  bureaus  at  $16.50. 

20.  Paid  sundry  expenses  in  cash,  $13.70. 

20.  Note  of  5th  inst.  and  interest  accrued  since  the  15th  have  been  paid  in  cash. 

22.  Sold  B.  F.  Smith  on  account  1^  doz.  D.  R.  chairs  at  $5  per  doz. ;  2  D.  R.  tables  at 

$7.50. 

23.  Paid  L.  Z.  Emmert  cash  on  account,  $400,  and  gave  him  note  at  20  days  for  $500. 
23.  Paid  note  of  24th  ult.  and  interest  in  cash. 

25.  Paid  note  of  23rd  inst.  in  cash,  less  discount. 

26.  Sold  Thomas  Lynn  on  account,  3  doz.  D.  R.  chairs  at  $16  per  doz. ;  2  doz.  rose- 

wood chairs  at  $35  per  doz. 

27.  B.  S.  Colvin  paid  note  of  19th  inst.  in  cash,  less  discount. 
29.   Received  cash  of  C.  F.  Crooks  on  account,  $75. 

1  See  footnote  on  page  86. 


88  Comprehensive  Bookkeeping 

August,  190-. 

30.  Paid  cash  for  stationery,  $8.25. 

31.  Sold  for  cash  to  D.  H.  Dean,  1  walnut  bookcase,  $28. 

Inventories :  merchandise,  $750 ;  real  estate,  $1200 ;  office  safe,  $275  ;  accrued  inter- 
est owed  to  others,  $10.45. 
Balances:  bills  payable,  $1900;  cash,  $1394.44;  C.  F.  Crooks,  Dr.,  $359.50. 


STATEMENTS 

Suggestion.  The  student  will  do  well,  at  this  point,  to  re-read  the  "Preliminary 
Remarks,"  beginning  on  page  32. 

A  statement  is  an  exhibit,  in  a  convenient  form,  of  the  principal 
facts  of  a  business  or  of  some  phase  of  a  business.  The  details  of  its 
arrangement  depend  upon  tlie  information  it  is  desired  to  make  promi- 
nent. The  sources  of  the  material  for  statements  will  depend  upon  the 
manner  of  keeping  the  books.  The  inventories,  at  least,  must  be  ob- 
tained from  sources  outside  of  the  principal  books. 

On  page  89  there  is  presented  a  statement  of  the  assets  and  lia- 
bilities, and  also  one  of  the  profits  and  losses,  as  they  stood  at  the  close 
of  the  business  recorded  in  the  illustrative  set  on  pages  22-30.  By 
referring  to  that  set,  it  will  be  seen  that  these  statements  give  a  com- 
prehensive view  of  the  business  at  that  time. 

Following  the  statements  mentioned  in  the  preceding  paragraph 
there  is  given  a  set  of  statements  for  a  partnership  business.  They  do 
not  represent  any  work  of  the  text-book. 

On  page  113  there  is  given  another  statement  slightly  different 
from  those  on  pages  89  and  90. 

EXERCISES   FOR   PRACTICE 

From  the  following  data  the  student  may  render  statements,  using  the  forms  on 
pages  89  and  90  as  models. 

Exercise   1 

John  Wilson  began  business  with  a  capital  of  $1200.  At  the  end  of  a  certain  period 
his  books  showed  the  following:  —  Cash  on  hand,  $1006.  Merchandise:  cost,  $1200; 
sales,  $700  ;  on  hand,  $60o/  Real  estate  on  hand,  $900.«^  J.  R.  Dillon,  Dr.,  $500.  W.  M. 
Steele,  Cr.,  $700.  R.  S.  Colvin,  Cr.,  $705.  Interest  paid  by  him,  $25.  Outlay  for  expenses, 
$30.    Notes  outstanding,  $350. 

Exercise   2 

Student  and  W.  A.  Lyman  commenced  business,  each  making  an  investment  of  $1600, 
profits  and  losses  to  be  divided  equally.  At  the  end  of  a  certain  period  their  books  showed 
the  following  facts:  —L,  M.  Black,  Dr.,  $400.     W.  S.  Jones,  Dr.  $200.     R.  S.  Crane,  Cr., 


^  Statements  89 


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90 


Comprehensive  Bookkeeping 


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Partnership 


91 


$315.  Merchandise  :  cost,  $1000  ;  sales,  $300  ;  on  hand,  $900.  Real  estate  :  cost,  $1200  ; 
sales,  $400 ;  value  of  that  remaining,  $950.^  Cash,  $800y  Notes  on  hand,  $600.^  Received 
for  interest,  $40.     Outlay  for  expenses,  $30.     Paid  for  taxes,  $25. 

Exercise  3 
This  trial  balance  exhibits  the  condition  of  a  business  at  the  time 
statements  are  to  be  made.     Make  the  statements. 


^^loL  ^CltdTK^b 


Student 

1000 

•' 

Cash 

1200 

800 

/ 

Mdse.  (unsold,  $400) 

1500 

1200 

l^ 

John  Kelley 

600 

800 

- 

D.  C.  Ardrey 

200 

500 

- 

Bills  receivable 

600 

500 

K 

Bills  payable 

37,5 

500 

/ 

Henry  Gibson 

200 

150 

" 

Charles  Hastings 
Expense  {inventory,  $250) 

210 
290 

250 

Interest 

40 

15 

5215 

5215 

Exercise  4 
(Profit  or  loss  to  be  divided  equally.     Make  statements.) 


■ 

Student 

1200 

W.  S.  Dunn  (partner) 
Mdse.  (unsold,  $500) 
Cash 

1500 
800 

1200 

1200 

500 

60 

Bills  receivable 

900 

400 

Real  estate  (value  on  hand,  $900) 
D.  S.  Brown 

1200 
700 

400 
200 

L.  E.  West 

450 

75 

25 

Samuel  Harper 
Interest 

290 
50 

90 

310 

70 

Expense 

W.  S.  Lambert 

45 
50 

65 

500 

5986 

55 

5986 

55 

Suggestions.  In  his  future  work  the  student  should  frequently  make  statements 
from  the  sets  he  is  writing. 

It  will  add  to  the  student's  information  if  he  will  begin  examining  statements  of 
banks,  insurance  companies,  etc.,  as  he  finds  them  from  time  to  time  in  the  newspapers 
and  in  advertising  matter. 


92  Comprehensive  Bookkeeping 

SET    yil.      PARTNERSHIPS.  — PROFITS    AND    LOSSES    IN 
PROPORTION    TO    INVESTMENT 

Suggestion.     In  this  set  the  use  of  the  journal,  cash-book,  and  sales  book  may  be 

continued. 

,       .^^  Exercise  1 

Serjtember,  190-. 

1.   Student  and  W.  A.  Allen  formed  a  partnership,  profits  and  losses  to  be  shared  in 

proportion  to  investment.    Student  invested  cash,  $2500,  and  an  account  against 

W.  A.  Dunn,  $500.     W.  A,  Allen  invested  real  estate,  $2200,  and  owed  Parnell 

&  Son  on  account,-$200. 

1.  Bought  of  Parnell  &  Son  on  account,  invoice  of  merchandise,  $650. 

2.  Sold  W.  J.  Terry  on  account,  5  bbl.  G.  (granulated)  sugar,  1500  lb.,  at  5|^ ;  10 
■  bbl.  flour  at  $4.80  ;  225  bu.  potatoes  at  50;^^. 

3.  Bought  of  R.  S.  Hale  &  Co.  invoice  of  merchandise,  $947.60.    Paid  them  cash, 

$302.60  ;  gave  them  our  note  at  60  days,  $500  ;  balance  on  account. 
6.   Sold  W.  A.  Dunn  on  account,  12  bbl.  flour  at  $4.80  ;  20  bbl.  potatoes  at  $1.40 ; 
8  bbl.  A  coffee  sugar,  2400  lb.,  at  5^^. 
[         6.   Sold  D.  H.  Blue  40  doz.  eggs  at  20^  ;  25  bbl.  apples  at  $2.50  ;  80  lb.  butter  at  25^  ; 
75  bu.  potatoes  at  50^.     Received  in  payment  note  at  30  days,  $100  ;  cash  for 
balance. 

6.  Sold  W.  J.  Terry  on  account,  5  bbl.  G.  sugar,  1500  lb.,  at  5|^ ;  5  bbl.  flour  at 

$4.80  ;  75  bu.  potatoes  at  50,<^. 

7.  W.  J.  Terry  paid  cash  on  account,  $225. 

8.  Sold  W.  A.  Dunn  on  account,  30  bbl.  apples  at  $2.60 ;  80  bbl.  potatoes  at  $1.25. 

8.  D.  H.  Blue  paid  cash  for  note  of  6th  inst.,  less  discount. 

9.  Sold  A.  R.  Black  for  cash,  10  bbl.  apples  at  $2.50  ;  12  bbl.  flour  at  $4.80  ;  40  bu. 

potatoes  at  50^. 
10.   Paid  R,  S.  Hale  &  Co.  on  account,  cash,  $125. 
10.   Sold  W.  A.  Dunn  on  account,  10  bbl.  apples  at  $2.60  ;  20  bbl.  potatoes  at  $1.25. 

Exercise   2 

(10.  Student  and  D.  E.  Beavers  entered  into  partnership,  profits  and  losses  to  be 
shared  proportionally.  Student  put  into  the  business,  merchandise,  $625  ;  cash, 
$2227.82 ;  an  account  against  W.  A.  Dunn,  $946.60  ;  and  owed  note  of  3rd, 
$500.  D.  E.  Beavers  invested  real  estate,  $2200 ;  cash,  $299.71  ;  and  owed 
Parnell  &  Son  on  account,  $850.) 
12.    Gave  Parnell  &  Son  our  note  at  30  days  on  account,  $600. 

12.  Sold  A.  M.  Camp  for  cash,  3  bbl.  G.  sugar,  835  lb.,  at  5|^ ;  40  bu.  potatoes  at 

50^  ;  25  doz.  eggs  at  18^. 

13.  W.  A.  Dunn  gave  us  note  at  30  days  on  account,  $475,  and  cash,  $300. 

13.  Prepaid  our  note  of  3rd  inst.,  favor  of  R.  S.  Hale  &  Co.,  in  cash,  less  discount. 

14.  Bought  of  R.  S.  Hale  &  Co.  invoice  of  merchandise,  $194.51.    Paid  cash,  $103.21 ; 

balance  on  account. 

14.  Sold  W.  J.  Terry  on  account,  15  bbl.  G.  sugar,  4500  lb.,  at  5|^  ;  225  bu.  potatoes 

at  50^  ;  90  lb.  butter  at  25;^ ;  35  doz.  eggs  at  16^. 

15.  Paid  John  Wilson  cash  for  printing  bill-heads,  $9.75. 

15.  Sold  R.  A.  Brown  for  cash,  20  bu.  potatoes  at  50^ ;  15  doz.  eggs  at  18;*. 

16.  Sold  W.  J.  Terry  on  account,  25  bu.  potatoes  at  50^  ;  35  lb.  butter  at  25f  j  25  doz, 

eggs  at  16^. 


Partnership  93 

September,  190-. 

16.  W.  A.  Dunn  prepaid  note  of  13th  inst.  in  cash,  less  discount. 

17.  Sold  W.  A.  Dunn  25  bbl.  apples  at  ^2.75  ;  50  doz.  eggs  at  22^ ;  60  bbl.  potatoes 

at  $1.20.     He  paid  cash,  $80  ;  balance  on  account. 

19.  Sold  W.  J.  Terry  on  account,  20  bbl.  apples  at  $2.50;  35  doz.  eggs  at  18^;  25 

bbl.  potatoes  at  $1.40. 

20.  W.  J.  Terry  paid  us  cash  on  account,  $400. 

EXEKCISE     3 

(20.  Student  and  M.  F.  Jarrett  entered  into  partnership,  profits  and  losses  to  be  shared 
proportionally.  Student  invested  real  estate,  $2200  ;  cash,  $1437.62.  M.  F. 
Jarrett  invested  cash,  $1819.19 ;  an  account  owed  by  W.  A.  Dunn,  $243.35. 
He  owed  on  note  of  the  12th,  $600  ;  Parnell  &  Son  on  account,  $250.) 

21.  Bought  of  R.  S.  Hale  &  Co.  invoice  of  merchandise,  $1448.50.     Paid  them  cash, 

$280  ;  balance  on  account. 

21.  Sold  W.  J.  Terry  on  account,  20  bbl.  apples  at  $2.75;  60  bbl.  potatoes  at  $1.10; 

40  lb.  butter  at  20^. 

22.  Gave  Parnell  &  Son  note  at  15  days  on  account,  $175. 

22.    Sold  A.  R.  Kennedy  for  cash,  8  bbl.  apples  at  $2.50;  13  bu.  potatoes  at  bOj^ ; 

30  doz.  eggs  at  20.0. 
22.    Prepaid  our  note  of  12th  inst.  in  cash,  less  discount  to  maturity. 
24.    Sold  W.  J.  Terry  on  account,  40  bbl.  flour  at  $4.87^;  40  bbl.  apples  at  $2.75; 

70  bbl.  potatoes  at  $1.10  ;  20  lb.  butter  at  20^. 
27.    Received  of  W.  A.  Dunn  note  at  20  days  on  account,  $240. 

27.  Sold  J.  H.  Dale  on  note  at  15  days,  25  bbl.  flour  at  $4.80;  12  bbl.  G.  sugar, 

3600  lb.,  at  5f^ ;  2  sacks  Rio  coffee,  300  lb.,  at  12  ij*. 

28.  Paid  freight  and  drayage  in  cash,  $14.35. 

28.  Sold  L.  C.  Adams  for  cash,  2  bbl.  apples  at  $2.50  ;  5  bu.  potatoes  at  50^, 

29.  W.  J.  Terry  paid  cash  for  sales  of  21st  and  24th. 

29.  Paid  cash  for  peruianent  improvements  on  real  estate,  $200. 

30.  Sold  W.  J.  Terry  on  account,  10  bbl.  flour  at  $4.80;  15  bbl.  potatoes  at  $1.10  ; 

70  lb.  butter  at  20^. 
30.  Paid  cash  for  sundry  expenses,  $8.60. 

/ 
October,  190-.  Exercise   4 

(1.  Student,  J.  S.  Colvin,  and  J.  W.  McCammon  began  a  partnership  business,  profits 
and  losses  to  be  divided  in  proportion  to  investment.  Student  invested  real 
estate  valued  at  $2500  ;  cash,  $557.68.  J.  S.  Colvin  invested  merchandise, 
$550;  cash,  $1228.84;  and  owed  on  note  of  September  22,  $175;  on  account 
to  Parnell  &  Son,  $75.  J.  W.  McCammon  invested  two  notes  dated  September 
27,  $604.50;  cash,  $924.34.) 
1.  Sold  B.  S.  Long  on  note  at  10  days,  with  interest,  15  bbl.  G.  sugar,  4500  lb.,  at 
5|^ ;  125  lb.  butter  at  24;^ ;  40  bbl.  apples  at  $2.50  ;  30  bbl.  potatoes  at  $1.50. 

3.  Bought  of  R.  S.  Hale  &  Co.  invoice  of  merchandise,  $1290.     Paid  cash  for  one- 

third  ;  balance  on  account. 

4.  Sold  H.  H.  Wood  on  account,  15  bbl.  flour  at  $4.75  ;  8  bbl.  G.  sugar,  2400  lb.,  at 

^<p  ;  50.doz.  eggs  at  20^  ;  80  lb.  butter  at  26^. 

5.  Bought  office  safe  of  John  Dunning  &  Co.,  paying  cash,  $450. 

6.  Paid  freight  bill  in  cash,  $26.20. 

7.  Sold  H.  M.  Andrews  on  his  note  at  30  days,  400  lb.  butter  at  23;^ ;  5  bbl.  G.  sugar, 

1500  lb.,  at  h\f  ;  75  bbl.  apples  at  $2.80. 


94  COMPKEHENSIVE   BOOKKEEPING 

October,  190-. 

7.  Paid  note  of  22nd  ult.  in  cash. 

8.  Sold  H.  H.  Wood  on  account,  15  bbl.  flour  at  $4.75 ;  3  sacks  Rio  coffee,  450  lb., 

at  12|^  ;  7  bbl.  standard  A  sugar,  2100  lb.,  at  5J^  ;  100  bbl.  apples  at  $2.50. 
10.   Bought  of  Parnell  &  Son  on  account,  invoice  of  merchandise,  $840. 

10.  Sold  H.  H.  Wood  on  account,  10  bbl.  flour  at  $4.75 ;  25  doz.  eggs  at  20^  ;  20  lb. 

butter  at  26)^. 

11.  Sold  W.  J.  Terry  12  bbl.  flour  at  $4.75  ;  10  bbl.  G.  sugar,  3000  lb.,  at  6lf  ;  40  bbl. 

apples  at  $2.60.     He  paid  cash,  $75  ;  balance  on  account. 

11.  B.  S.  Long  paid  cash  for  note  of  1st  inst.,  and  interest. 

12.  H.  H.  Wood  paid  cash  on  account,  $80. 

12.  Received  cash  of  J.  H.  Dale  for  note  of  27th  ult. 

13.  Paid  R.  S.  Hale  &  Co.  cash  on  account,  $500. 

14.  Sold  W.  J.  Terry  on  account,  6  bbl.  flour  at  $4.75  ;  20  bbl.  apples  at  $2.60. 

15.  W.  J.  Terry  paid  cash  on  account,  $325. 

Exercise  5 

(15.  Student,  A.  D.  Judd,  and  L.  H.  Mills  entered  into  partnership,  profits  and  losses 
to  be  shared  in  proportion  to  investment.  Student  invested  real  estate,  $2500  ; 
cash,  $626.21  ;  and  owed  Parnell  &  Son  on  account,  $915.  A.  D.  Judd  invested 
merchandise,  $800 ;  oiBfice  safe,  $450 ;  cash,  $901.21.  L.  H.  Mills  invested 
cash,  $881.21;  notes  of  September  27  and  October  7,  $624.50;  H.  H.  Wood's 
account,  $705.50.) 
17.    W.  A.  Dunn  has  paid  note  of  27th  ult.  in  cash. 

17.  Bought  of  R.  S.  Hale  &  Co.  on  account,  invoice  of  merchandise,  $730. 

18.  Sold  W.  A.  Dunn  on  account,  50  bbl.  G.  sugar,  15,000  lb.,  at  5|^ ;  12  bbl.  stand- 

ard A  sugar,  3600  lb.,  at  5^^  ;  5  sacks  Rio  coffee,  700  lb.,   at  12^jJ;  5  bbl. 
apples  at  $2.75. 

18.  Received  of  H.  H.  Wood  on  account,  note  at  10  days,  with  interest,  $600 ;  cash, 

$100. 

19.  Sold  L.  M.  Bailey  for  cash,  10  bbl.  G.  sugar,  2890  lb.,  at  5^^ ;  8  bbl.  apples  at 

$2.75  ;  10  bbl.  potatoes  at  $1.40. 

21.  Sold  A.  D.  States  10  bbl.  G.   sugar,  3000  lb.,  at  5^^ ;  8  bbl.  standard  A  sugar, 

2400  lb.,  at  5J^ ;  120  bbl.  apples  at  $2.60.     Received  note  at  20  days  for  one- 
half  ;  cash  for  balance. 

22.  Note  of  7th  inst.  has  been  paid  in  cash,  less  discount. 

22.    Gave  Parnell  &  Son  our  note  at  30  days  on  account,  $500  ;  cash,  $300. 
22.   Bought  of  Parnell  &  Son  on  account,  invoice  of  merchandise,  $1000. 

24.  Sold  H.  H.  Wood  on  account,  90  doz.  eggs  at  18^ ;  125  lb.  butter  at  26^  ;  30  bbl. 

potatoes  at  $1.40  ;  15  bbl.  flour  at  $4.75. 

25.  Student  withdrew  cash  for  private  use,  $260. 

26.  Sold  W.  A.  Morgan  on  his  note  at  15  days,  40  doz.  eggs  at  18^  ;  20  bbl.  flour  at 

$4.75  ;  25  bbl.  potatoes  at  $1.40. 

27.  Paid  R.  S.  Hale  &  Co.  cash  on  account,  $620. 

28.  Paid  freight  bills  in  cash,  $26.40. 

28.    Received  cash  for  note  of  18th  inst.  and  interest. 
31.    W.  A.  Dunn  paid  cash  on  account,  $800. 

Inventories  :  merchandise,  $527.85  ;  real  estate,  $2500  ;  office  safe  valued  at  $425. 
Balances:    cash,   $3823.22;    bills  receivable,   $438.70;    bills  payable,   $500;    H.   H. 
Wood,  Dr.,  $167.45  ;  W.  A.  Dunn,  Dr.,  $315.25  or  $318.60. 


Commercial  Paper  95 

COMMERCIAL   PAPER 
11 


21 


OUTLINE 

Promises 

12 

Parties  to  a  promise 

13 

Original 
14   Maker 
2*   Payee 

23 

Subsequent 
1*   Indorsor 
2*   Indorsee 

22 

Classes 

13 

Bills  receivable 

23 

Bills  payable 

Orders 

12 

Parties  to  an  order 

13 

Original 
1*   Drawer 
2*   Drawee 
3*   Payee 

23 

Subsequent 
1*   Indorsor 
2*   Indorsee 
3*   Acceptor 

22 

Classes 

13 

General 

23 

Specific 
1*    Checks 
2*   Drafts 

1^    Kinds  as  tc 

)  parties 

~ 

16 

Personal 

26 

Bank 
V 

27 

(or  bill  of  exchange) 
Domestic 
Foreign 

2^   Kinds  as  to  time  of  payment 

16 

Sight 

26 

Time 
1' 

27 

After  sight 
After  date 

3*   Letters  of  credit 

4*   Money  orders 

IS   Postal 

(25   Express) 

96  Comprehensive  Bookkeeping 

DEFINITIONS   AND   EXPLANATIONS 

Promises  are  usually  called  notes  and  have  already  been  considered 
on  page  48.  [It  may  be  well  for  the  student,  in  this  connection,  to 
re-read  what  is  there  said.] 

An  order  is  a  request  of  one  person  upon  a  second  to  pay  money  or 
to  deliver  goods  to  a  third  person. 

There  are  three  original  parties  to  an  order,  the  drawer,  the  drawee, 
and  the  payee.  The  drawer  is  the  person  drawing  the  order,  or  the 
one  who  signs  it ;  the  drawee  is  the  person  upon  whom  it  is  drawn,  or 
the  person  to  whom  it  is  addressed,  or  who  is  to  pay  it ;  the  payee  is 
the  person  in  whose  favor  it  is  drawn,  or  the  one  to  whom  the  money 
is  to  be  paid,  or  to  whom  the  goods  are  to  be  delivered.  When  the 
drawee  accepts  an  order  he  becomes  an  acceptor.  If  the  payee  trans- 
fers an  order  to  another  by  indorsement,  he  becomes  an  indorsor.,  and 
the  person  to  whom  it  is  thus  transferred  becomes  an  indorsee. 

Orders  may  be  classed  as  general  and  specific.  The  general  order 
(called  simply  an  order)  is  used  in  any  common  business  transaction  in 
which  a  second  person  is  requested  to  pay  money  or  to  deliver  goods  to 
a  third.  Specific  orders  are  given  different  names  depending  upon  the 
circumstances  or  relations  in  which  they  are  used. 

A  check  is  a  written  order  of  a  person  on  a  bank  requesting  the 
payment  of  a  specified  sum  of  money. 

For  illustration  of  order  and  check,  see  "  Business  Forms,"  page  131. 

DRAFTS 

A  personal  draft  is  a  written  ojrcler  of  one  person  on  a  second  requesting 
the  payment  of  a  specified  sum  of  money  to  a  third  person  or  to  his  order. 

A  hank  draft  is  a  written  order  of  one  bank  on  a  second  bank 
requesting  the  payment  of  a  specified  sum  of  money  to  some  individual 
or  firm.  It  may  be  obtained  at  a  bank  and  sent  through  the  mail 
instead  of  sending  the  money.  It  offers  a  safe  and  convenient  method 
of  transmitting  money.  A  draft  can  usually  be  cashed  at  any  bank 
where  the  payee  is  known  or  where  he  can  be  identified.  Bank  drafts 
are  treated  as  cash. 

In  reference  to  time  of  payment,  drafts  may  be  drawn  in  any  one 
of  three  ways :  (1)  payable  at  sight,  (2)  payable  a  given  number  of 
days  after  sight,  or  (3)  payable  a  given  number  of  days  after  date. 


Commercial  Paper  97 


Use  of  Drafts  Illustrated 


Drafts  are  used  to  avoid  the  risk  and  expense  of  sending  money 
through  the  mail.  Suppose  that  Joseph  P.  Horn,  of  Omaha,  owes 
J.  H.  Hamilton,  of  Kansas  City,  $590,  and  that  Samuel  L.  Larned,  of 
Kansas  City,  owes  Joseph  P.  Horn,  of  Omaha,  1590.  To  settle  these 
debts,  Larned,  at  Kansas  City,  could  send  to  Horn,  at  Omaha,  $590, 
and  then  Horn  could  send  to  Hamilton,  at  Kansas  City,  $590 ;  but  this 
would  necessitate  sending  the  money  twice  through  the  mail.  Mani- 
festly the  same  result  could  be  attained  if  Horn  would  instruct  Larned 
to  pay  Hamilton  the  $590.  And  as  Larned  and  Hamilton  live  in  the 
same  city,  there  is  no  risk  and  no  expense.  Horn  does  this  by  writing 
an  order  on  Larned  and  sending  it  to  Hamilton  by  mail.  Hamilton 
presents  it  to  Larned  and  receives  his  pay.  Such  an  order  is  called  a 
draft.     It  is  illustrated  here  in  the  form  of 

A  SIGHT   DRAFT 


Omaha,  Keh.,  c/t(yv-£mU>-&v  / ,  190.^ 

Due. 


dt  dlcfkt  -pay  to  the  order  of f.  /if.  /famvittcmy,^.^^  6^0.00 

,S^lv-&  ku^dv&ci  nvwetif  a/yid  j^ Dollars, 

value  received,  and  c1%ar^e  to  the  account  of 

To  ^am.u.e^t  L.  La.v^&ci,  jo^s/fik  ^.  /favn. 


In  the  foregoing  draft,  Joseph  P.  Horn  is  the  drawer,  Samuel 
L.   Larned  is  the  drawee,  and  J.  H.   Hamilton  is  the  payee. 

Journal  Entries  for  Foregoing  Draft 

Joseph  P.  Horn's  Entry.  If  Horn  had  received  the  cash  from 
Larned,  he  would  debit  cash  and  credit  Larned.  Then  if  he  remitted 
the  cash  to  Hamilton,  he  would  debit  Hamilton  and  credit  cash.  But 
no  cash  comes  into  his  possession.  Hamilton,  however,  just  as  cer- 
tainly receives  it,  and  Larned  gives  it  up  for  Horn's  benefit ;  hence  he 
debits  Hamilton  and  credits  Larned  : 

J.  II.  Hamilton  590.00 

Samuel  L.  Larned         590.00  w         or  thc 

Jit, 


98  Comprehensive  Bookkeeping 

Samuel  L.  Larned's  Entry.  If  Larned  paid  the  cash  to  Horn, 
he  would  debit  Horn  and  credit  cash.  But  as  he  simply  hands  it  to 
some  one  else  on  Horn's  order,  it  is  the  same  in  effect  as  though  he 
had  paid  it  to  Horn,  and  he  makes  the  following  entry : 

Joseph  P.  Horn  590.00 

Cash  590.00 

J.  H.  Hamilton's  Entry.  If  Hamilton  received  the  cash  directly 
from  Horn,  he  would  debit  cash  and  credit  Horn.  But  receiving  it 
from  Larned  on  Horn's  order  is  the  same  to  him  in  effect  as  receiving 
it  from  Horn ;  hence  he  makes  the  entry  thus : 

Cash  590.00 

Joseph  P.  Horn  590.00 

If  the  student  will  put  himself  in  the  place  of  each  of  these  persons 
in  turn,  the  matter  will  seem  quite  clear  to  him. 

Remark.  —  In  filling  blank  spaces  in  printed  forms  of  drafts, 
checks,  notes,  etc.,  the  items  written  in  should  begin  at  the  extreme 
left  of  the  blank  spaces  with  a  line  following  each  to  fill  up  the 
remainder  of  the  space  so  as  to  make  it  as  difficult  as  possible  for 
alterations  to  be  made,  or  if  the  items  written  in  are  placed  in  the 
middle  of  the  spaces,  they  should  be  both  preceded  and  followed  by  a 
stroke  of  the  pen. 

Time  Drafts 

A  time  draft,  to  be  binding  upon  the  drawee,  must  be  accepted  by 
him.  The  drawee  accepts  by  writing  across  the  face  of  the  draft  the 
word.  Accepted^  and  signing  his  name.  This  makes  him  legally  respon- 
sible for  payment,  and  the  draft  becomes  the  same  as  a  note.  In  other 
words,  by  acceptance  the  draft  becomes  a  promise  instead  of  an  order ; 
hence  it  is  a  "bill  payable"  to  the  drawee  and  a  "bill  receivable"  to 
the  payee.  If  the  draft  is  drawn  payable  a  certain  number  of  days 
after  sight,  the  acceptance  must  be  dated,  in  order  to  determine  the 
date  when  it  will  fall  due.  If  it  is  made  payable  a  certain  number  of 
days  after  date,  it  does  not  matter  whether  the  acceptance  is  dated  or 
not,  as  it  will  not  affect  the  time  when  the  draft  falls  due.  The  place 
where  the  draft  is  to  be  paid  may  be  designated  in  the  acceptance. 
[The  acceptance  will  be  neater  and  plainer  if  written  in  red  ink,  but 
it  may  be  written  in  any  kind  of  ink,  or  even  with  a  pencil.] 


Commercial  Paper 


99 


AFTER   SIGHT"    TIME  DRAFT 


Vi 

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Detroit,  Mich.,  TTlaAf  /5,  190. 


JTo 

Due 

pay  to  the 


order  of .^..^.....^^^.  fC.  ^cunldo.; $2^3.78 

— c^w^  kwyvcLv&cL  j^(yJyi^-tAv&&  and  —..^Dollars, 
value  received,  and  charge  to  the  account  of 

To  f^fvl&Q.  V  (^a.,  fcyyiamxyyv  V  ^o. 


AFTER  DATE"  TIME  DRAFT 


Bangor,  Me.,  fwyv&  6,  190. 


Jfo.. 


Due^ 


.oJ'&ru  dxiA4^  ait&v  dat&..^.^.^.^~^.^..~^pay  to 

^av-icL  m.  <^ZW<&™,.^or  order,  $/ 68.^5 

.^^€n&  kwy^dv&ci  Q.C9cty-£U^kt  ci'vid  —.^..JDollars, 
value  received,  and  charge  to  the  account  of 

To  /?.  c^.  Bo-^v~^&v,  (Z.  c/f.  (^aUw-M. 


Journal  Entries  for  the  Second  of  the  Foregoing 
Time  Drafts 

At  the  time  the  draft  was  drawn  and  accepted,  the  different  persons 
would  have  made  entries  in  their  books  as  follows  : 


1.  A.  N.  Caldwell . 

2.  R.  S.  Bowser     . 

3.  David  M.  Stone 


{  David  M.  Stone         168.45 

\         R.  S.  Bowser  168.45 

M.  N.  Caldwell  168.45 

I  Bills  Payable  168.45 

{Bills  Receivable         168.45 

\         A.  N.  Caldwell  168.45 


100  Comprehensive  Bookkeeping 

At  the  time  the  draft  was  due,  supposing  it  was  paid  in  cash,  the 
drawee  and  the  payee  would  have  made  entries  as  follows  : 

^      -r»    o    7^  {Bills  Payable  168.45 

1.  R.  S.  Bowser     .         .         .    \  ^    f 

1  Cash  168.45 

o     -n     •/!  TVT    c^  f  ^^^^  168.45 

2.  David  M.  Stone  .         .   i  ^...    ^      .    ,, 

I  Bills  Receivable  168.45 


Draft,  Two  Persons 

Sometimes  there  are  only  two  parties  to  a  draft,  one  sustaining  a 
double  relation  to  it.  In  the  following  draft  William  W.  Wiley  is 
both  drawer  and  payee  : 


Washington, 

B.C.,  Hd^alye/L  16,  190^ 

JS^o.^ 
Due. 

S^IvIaZa^  cioAfxl^ 

dj^t&v  clcit&^  .     ^ 

^.^pay 

to  the  order  of 

WyU^yFjOi 

$  ^8.00 

-C-AiyrLFAyU.—i 

^A.q/it  d^cl  ^  . . . 

/                           100 

to  the  account 

Dollars, 

_  __  — .  -..   _.^    . 

value  received,  and  cJmrge 

of 

To  c/. 

S^.  lA>oacU, 

W<Ztiaym^  li)^ 

lOitmf. 

^kitouci&t/Jii.kia.,  ^ou. 

Indorsements 

Drafts,  notes,  checks,  or  other  commercial  paper,  when  drawn  pay- 
able to  order,  must  be  indorsed  by  the  payee,  if  transferred  to  some 
other  person.  This  he  may  do  by  simply  writing  his  name  across  the 
back  of  the  paper.     This  would  be  a  blank  indorsement.     Or  he  may 

write.  Pay  to  the  order  of. (^person's  name) and  sign  his  name. 

This  would  be  a  full  indorsement. 

Assuming  that  Wiley  transferred  the  foregoing  draft  to  E.  T.  Harris 
by  a  full  indorsement,  and  that  E.  T.  Harris  transferred  it  to  W.  C. 
Meyers  by  a  blank  indorsement,  the  indorsements  would  appear  on  the 
back  of  the  draft  as  shown  on  the  opposite  page. 

Indorsements  are  usually  written  across  the  left-hand  end  of  the 
back  of  drafts,  notes,  checks,  or  other  commercial  paper. 


Commercial  Paper  \  \  \'^  \ :;  \ ;        \  ;  ^   101 


' 

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>'»''jjO*JJ           "rf^J        ■>     ■>         ->J-          •> 

^          ^ 

1  3 

# 

^  Ji 

^S 

4  ^-^  ^ 

^ 

.^ 

Besides  the  forms  of  indorsement  given  in  the  preceding,  there  are 
other  kinds,  some  of  which  are  here  illustrated : 


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A  FORM   OF   BANK   DRAFT 


Efje  Commercial  National  Bank 

Kansas  City,  Kansas,  of  &  fat.  /6,  190.^^ 

Pay  to  the  order  o/______c/.  ^.  lU-iUo-n, $^^.2d 

cAineXAf- j^o-uv  a^ncL  — Dollars. 

To  3~k&  W&oZ&iun  cAdtlanat  Bcmk/,  ^.  L.  fSvo^aiA^, 

c/t&w-  ya-vky,  cA.y.  ^a^ki&v. 


In  buying  a  bank  draft  it  may  be  made  payable  to  the  order  of  the 
person  to  whom  it  is  to  be  sent,  or  to  the  order  of  the  purchaser.  The 
latter  is  the  better  plan,  for  the  purchaser  must  then  indorse  it  before 
delivering  it ;  and  this  he  should  do  by  a  full  indorsement.  This 
indorsement  will  enable  the  draft  to  be  identified  if  it  should  become 
separated  from  the  instructions  relating  to  it. 


102 


Comprehensive  Bookkeeping 


^'r'  :^*c  >:  S^PEOiALi  Models  for  Journalizing  Drafts 

1.    Entries  of  drawer  Dr. 

1.    When  he  draws  a  sight  or  time  draft  ]  Payee 


and  remits  it  to  the  paj^ee  on  account . 

2.  When  he  draws  a  time  draft  and  has  it  i  Caiih 

discounted,    receiving    cash   for   pro-  \  Biscouyit 
ceeds 

3.  When  he  draws  a  time  draft  payable  to  -i  ^^y^^  ji^^ 

himself,   which    is    accepted    by   the 
drawee 


Cr. 


Drawee 


Drawee 


Drawee 


2.  Entries  of  drawee 

1.  When  he  accepts  a  time  draft  drawn  on 

himself  on  account 

2.  When  he  pays  in  cash  a  sight  draft  on 

himself 

3.  When  he  prepays  a  time  draft  on  him- 

self in  cash,  less  the  discount 

4.  When  he  pays  his  acceptance  at  matur- 

ity in  cash 

5.  When   he   pays   his   acceptance   before 

maturity  in  cash,  less  the  discount 

3.  Entries  of  payee 

1.  When    he    receives    from    the    drawer 

on  account  a  sight  draft  which  the 
drawee  pays  in  cash 

2.  When  he  receives  from  the  drawer  on 

account  a  time  draft  which  the  drawee 
accepts 

3.  When  he  receives  from  the  drawer  on  ^ 

account  a  time  draft  which  the  drawee  !► 
prepays  in  cash,  less  the  discount         J 

4.  When  he  buys  a  time  draft  payable  to  i 

his  order,  instead  of  receiving  it  on  \ 
account,  paying  cash,  less  the  discount  J 


Drawer 

Bills  Pay. 
Drawer 

Cash 
Drawer 

Discount 

Cash 
Bills  Pay. 

Cash 
Bills  Pay. 

Cash 

Discount 


Cash 


Drawer 


Bills  Rec. 

Drawer 

Cash 

Discount 

Drawer 

Bills  Rec. 

Cash 

Discount 

Draft  Transactions  103 

LETTER   OF   CREDIT   AND   MONEY  ORDERS 

A  letter  of  credit  is  a  written  order  of  one  bank  on  another,  the 
latter  usually  in  a  foreign  country,  and  is  honored,  not  only  by  the 
bank  on  which  it  is  drawn,  but  also  by  any  banking  institution  having 
business  relations  with  the  drawee.  The  payee  may  receive  partial 
payments  on  the  letter  of  credit  until  the  aggregate  amount  equals 
the  face  of  the  letter. 

A  postal  money  order  is  a  written  order  of  one  post-office  on  another 
requesting  the  payment  of  a  specified  sum  of  money.  Postal  money 
orders  are  made  out  in  duplicate  :  one  of  these,  which  may  be  regarded 
as  the  original,  is  given  to  the  purchaser  and  mailed  by  him  to  the 
payee  ;  the  other,  called  the  advice^  is  sent  by  the  postmaster  of  the 
issuing  office  to  the  postmaster  of  the  paying  office,  instructing  him 
to  pay  the  sum  specified  to  the  person  named,  when  the  original  order 
is  presented  by  the  payee. 

In  an  express  money  order^  the  express  company  agrees  to  transmit 
and  pay  a  specified  sum  of  money  to  the  order  of  a  specified  person. 
Although  worded  like  a  promise,  it  serves  every  purpose  of  an  order, 
for  it  will  be  cashed  at  any  office  of  the  company  or,  usually,  at  an 
office  of  any  other  express  company,  or  at  any  bank. 

SET   VIII.      DRAFT   TRANSACTIONS   INTRODUCED 

Note.  The  primary  object  of  this  set  is  to  give  a  drill  in  journalizing  draft  transac- 
tions. If  it  is  used  simply  for  this  purpose,  only  those  transactions  involving  drafts  need 
be  journalized.  On  the  other  hand,  it  may  be  written  as  a  complete  set.  If  this  is  done, 
it  is  left  to  the  teacher  to  decide  what  books  shall  be  used. 

It  will  be  well  for  the  student  to  write  a  number  of  these  drafts,  following  the  forms 
already  given. 

Exercise  1 

September,  190-. 

1.  Commenced  business  with  cash,  $3000  ;  notes  on  hand,  $500  ;  and  owed  Granby 

&  Co.  on  account,  $400. 

2.  Bought  merchandise  of  Playter  &  Co.  on  account,  $840. 

3.  Sold  merchandise  to  G.  A.  Dillon  on  account,  $120. 

4.  Sold  merchandise  to  H.  I.  Spencer,  $230.    Received  cash,  $30  ;  balance  on  account. 

5.  Drew  a  draft  at  ten  days'  sight  on  G.  A.  Dillon  and  remitted  it  to  Granby  &  Co. 

to  apply  on  account,  $100. 
8.    Playter  &  Co.  drew  a  draft  on  me  at  five  days'  sight  in  favor  of  H.  T.  Jackson, 

which  I  accepted,  $840. 
8.    Paid  cash  for  freight,  $12.30. 


104  Comprehensive  Bookkeeping 

September,  190- 

9.    Paid  Granby  &  Co.'s  sight  draft  on  me,  favor  of  themselves,  in  cash,  ^300. 
10.    Received  a  draft  at  eight  days'  sight  from  H.  I.  Spencer  on  D.  E.  Browning, 
vsrhich  he  accepted,  $80. 

10.  Sold  merchandise  to  G.  A.  Dillon,  ^160.     He  gave  me  a  sight  draft  on  L.  J.  Bur- 

gess, which  he  paid  in  cash,  $90  ;  balance  on  account. 

Exercise  2 

(11.    Commenced  business  with  merchandise,  $450  ;  notes  and  draft  on  hand,  $580  ; 
cash,  $2807.70.     Owed  on  draft  outstanding,  $840.) 

11.  Sold  merchandise  to  H.  I.  Spencer  on  account,  $245. 

12.  Bought  merchandise  of  Granby  &  Co.,  $650.     Gave  my  draft  at  twenty  days 

from  date  on  H.  I.  Spencer  for  $150  ;  balance  on  account. 

13.  Sold  merchandise  to  G.  A.  Dillon  on  account,  $370. 
13.    Paid  my  acceptance  of  the  8th  in  cash,  $840. 

15.  Prepaid  in  cash  Granby  &  Co.'s  draft  on  me  for  $300,  favor  of  L.  M.  Garges,  less 

a  discount  of  $3.45. 

16.  Bought  merchandise  of  Playter  &  Co.  on  account,  $370. 

16.  Received  draft  of  G.  A.  Dillon  at  thirty  days  from  date  on  Frank  Burns  for  $200, 

which  the  drawee  paid  in  cash,  less  a  discount  of  $1. 

17.  Drew  a  draft  on  H.  I.  Spencer  at  ninety  days  from  date,  favor  of  myself,  for 

$90  and  had  it  discounted  at  bank,  receiving  cash  for  the  proceeds :  discount, 
$1.35 ;  proceeds,  $88.65. 

18.  Received  cash  for  D.  E.  Browning's  acceptance  of  the  10th,  $80. 

19.  Drew  a  draft  at  ten  days  from  date  on  G.  A.  Dillon  in  favor  of  Playter  &  Co.  for 

$100.    Remitted  it  to  Playter  &  Co.  on  account. 

Exercise  3 

(22.    Commenced  business  with  cash,  $2038.80;  merchandise,  $850;  bills  receivable 
on  hand,  $500.     Owed  on  account,  Granby  &  Co.  $200  ;  Playter  &  Co.,  $270.) 
22.    Sold  merchandise  to  G.  A.  Dillon  on  account,  $190. 

22.  Bought  office  safe  for  cash,  $450. 

23.  Granby  &  Co.  drew  a  draft  at  seven  days'  sight  on  me,  favor  of  themselves,  which 

I  have  accepted,  $200. 

24.  Gave  Playter  &  Co.  a  draft  at  ten  days  after  date  on  G.  A.  Dillon  for  $100. 

25.  Sold  merchandise  to  H.  I.  Spencer  on  account,  $360. 

26.  G.  A.  Dillon  gave  me  a  draft  at  fifteen  days'  sight  on  David  Marshall,  which  he 

has  accepted,  $75, 

27.  Received  cash  for  note  and  interest :  face  of  note,  $300  ;  interest,  $4.75. 

29.  H.  I.  Spencer  gave  U.  R.  Grant  a  draft  on  me  at  thirty  days'  sight,  which  I  paid 

in  cash,  less  discount :  face  of  draft,  $300  ;  discount,  $1.45. 

30.  Paid  my  acceptance  of  the  23rd  in  cash,  $200. 

^  ^  ,       inn  Exercise  4 

October,  190-. 

(1.    Student  and  Leroy  Branson  commenced  business,  profits  and  losses  to  be  shared 

equally.     Student  invested  cash,  $375  ;  merchandise  $300  ;  office  safe,  $450. 

Leroy  Branson   invested   cash,  $1020  ;   bills  receivable,    $275.     He   owed   an 

account  to  Playter  &  Co.,  $170. 

Or  admitted  Leroy  Branson  as  a  partner,  who  invested  cash  equal  to  student's 

present  worth.) 


Draft  Transactions  105 

October,  190-. 

1.    Sold  merchandise  to  G.  A.  Dillon  on  account,  $120. 

1.  raid  cash  for  stationery,  $8.75. 

2.  Bought  merchandise  of  Granby  &  Co.  on  account,  $470. 

3.  Paid  Playter  &  Co.'s  sight  draft  on  me  (or  us)  in  cash,  $90. 

4.  Gave  Granby  &  Co.  a  draft  at  ten  days'  sight  on  G.  A.  Dillon  for  $80. 

6.  Sold  H.  I.  Spencer  merchandise  on  account,  $250. 

7.  Accepted  Granby  &  Co.'s  draft  on  me  (or  us)  at  six  days'  sight,  favor  of  T.  J. 

Blatchly,  $125. 

8.  Received  of  H.  I.  Spencer  a  draft  at  twenty  days'  sight  on  Peter  Giles,  which  he 

has  accepted,  $150. 

9.  Prepaid  Playter  &  Co.'s  draft  on  me  (or  us)  at  sixty  days'  sight,  favor  of  George 

W.  Washer,  in  cash,  less  discount :  face  of  draft,  $80  ;  discount,  80^. 

10.  Drew  a  draft  on  H.  I.  Spencer  at  ninety  days  from  date  for  $100  and  had  it  dis- 

counted at  bank,  receiving  cash  for  the  proceeds.     Discount,  $1.50  ;  proceeds, 
$98.50. 

Exercise  5 

(11.  Student  and  Ira  Maner  commenced  business  to  share  profits  and  losses  equally. 
Student  invested  cash,  $90.27 1;  merchandise,  $400;  office  safe,  $450;  bills 
receivable,  $425.  He  owed  Granby  &  Co.  on  account,  $265.  Ira  Maner  in- 
vested cash,  $1225.28,1  and  owed  on  an  accepted  draft  outstanding,  $125. 
Or  admitted  Ira  Maner  as  an  equal  partner,  who  invested  cash  equal  to  student's 
present  worth.) 

11.  Accepted  Granby  &  Co.'s  draft  on  me  (or  us)  at  seven  days'  sight,  favor  of  them- 

selves, $200. 

13.  Paid  the  acceptance  of  the  7th  in  cash,  $125. 

14.  Sold  merchandise  to  H.  I.  Spencer,  $290.     Received  a  draft  at  sixty  days'  sight 

on  Judson  Wood,  which  he  has  accepted,  for  $150  ;  balance  on  account. 

15.  Received  cash  on  note  and  interest :  face  of  note,  $100  ;  interest,  $2.65. 

16.  Bought  merchandise  of  Playter  &  Co.  on  account,  $495. 

17.  Sold  merchandise  to  G.  A.  Dillon  on  account,  $235. 

17.  Judson  Wood  paid  his  acceptance  of  the  14th  in  cash,  less  discount  to  maturity  : 

face  of  draft,  $150 ;  discount,  $1.43. 

18.  Bought  ten  lots  for  $1250  and  gave  note  in  payment. 
i8.   Paid  the  acceptance  of  the  11th  in  cash,  $200. 

20.  Paid  freight  bills  in  cash,  $22.50, 

Exercise  6 

(21.  Commenced  business,  investing  cash,  $1219.27  2;  merchandise,  $300;  bills  re- 
ceivable, $325  ;  office  safe,  $450  ;  real  estate,  $1250.  Owed  on  bills  payable, 
$1250  ;  Playter  &  Co.  on  account,  $495.) 

21.  Paid  Playter  &  Co.'s  sight  draft  in  favor  of  Charles  Baker  in  cash,  $200. 

22.  Sold  merchandise  to  G.  A.  Dillon  on  account,  $325. 

22.    Received  of  G.  A.  Dillon  a  draft  at  sixty  days'  sight  on  John  Sanders,  which  he 

accepted,  $250. 
24.    Sold  five  lots  for  cash,  $800. 

1  The  sum  of  the  two  cash  amounts  may  not  agree  with  the  cash  balance  of  the 
preceding  exercisCo 

2  This  may  not  agree  with  the  cash  balance  of  the  preceding  exercise. 


106  Comprehensive  Bookkeeping 

October,  190-. 

25.  Prepaid  Playter  &  Co.'s  draft  at  thirty  days'  sight  in  cash,  less  discount :  face  of 
draft,  .$175  ;  discount,  88^. 

27.  John  Sanders  prepaid  his  acceptance  of  the  22nd,  less  discount  to  maturity:  dis- 
count, $2.29  ;  cash  received,  $247.71. 

27.  Paid  note  in  cash,  $1250  ;  interest  on  same,  $1.88. 

28.  Bought  merchandise  of  Granby  &  Co.  on  account,  $47^. 

28.  Received  cash  of  Peter  Giles  for  his  acceptance  of  the  8th,  $150. 

29.  Paid  clerk  hire  in  cash,  $45. 

Inventories  :  merchandise,  $500 ;  office  safe,  $440  ;  real  estate,  $700. 

SET  IX.      COLLECTION  AND  EXCHANGE  TRANSACTIONS 

INTRODUCED 

If  a  person  or  a  bank  is  paid  for  collecting  checks,  etc.,  the  ser- 
vice of  such  a  person  or  bank  has  been  received  ;  hence  the  service  is 
debited.  In  this  case  the  title  Collection  is  generally  used,  designat- 
ing the  purpose  for  which  the  service  has  been  received.  The  person 
or  bank  making  the  collection  credits  the  collection  account,  desig- 
nating the  object  for  which  the  service  has  been  given. 

If  a  bank  is  paid  for  its  service  in  issuing  a  draft,  the  service  is 
debited  by  using  the  title  Exchange  designating  the  purpose  for  which 
the  service  is  received. 

These  two  items  may  be  grouped  under  the  title.   Collection  and 

Exchange, 

Sdggestions.  The  journal  and  the  cash-book  may  be  used  in  this  set.  Write  the 
checks  and  bank  drafts. 

Exercise  1 
August,  190-. 

1.  Student  began  business,  investing  cash,  $2500  ;  account  against  S.  H.  Crane, 

$700,  and  owed  Ramsey  «&  Day  on  account,  $345. 

2.  Bought  of  J.  W.  Harvey  on  account,  invoice  of  merchandise,  $895. 

3.  Bought  draft  at  Commercial  National  Bank  for  $275  cash  and  remitted  it  to  Ram- 

sey &  Day  on  account.    Bank  charged  |%  exchange,  69^. 

4.  Received  of  S.  H.  Crane  check  on  Commercial  National  Bank  to  apply  on  account, 

$320. 

6.  Had  S.  H.  Crane's  check  cashed  at  bank,  charge  for  collection  being  y\j%,  32^. 

7.  Sold  W.  C.  Frazier  200  lb.  G.  (granulated)  sugar  at  %\f  ;  3  bbl.  A  sugar,  750  lb., 

at  h\f ;  140  gal.  golden  syrup  at  75{^.  He  gave  me  check  on  Traders'  State 
Bank  for  $100  ;  balance  on  account.  Bank  charged  3^%  collection  for  cash- 
ing check. 

8.  Bought  draft  at  Commercial  National  Bank  for  $300,  paying  cash,  bank's  charge 

for  exchange  being  i%,  and  remitted  it  to  J.  W.  Harvey  on  account. 

9.  Sold  S.  H.  Crane  4  bbl.  A  sugar,  10001b.,  at  ^\f  \   260  gal.  golden  syrup  at  75^; 

130  gal.  maple  syrup  at  85^  ;  9  bbl.  cranberries  at  $6.75.  He  gave  me  a  check 
on  Union  National  Bank  for  $175,  on  which  bank  charged  -^^  %  collection  for 
cashing  ;  balance  on  account. 


Collection  and  Exchange  107 

August,  190-. 

9.    Paid  freight  bill  in  cash,  $17.25. 

10.  Sold  H.  K.  Adams  16  bbl.  cranberries  at  $6.75  ;  60  gal.  maple  syrup  at  85^  ;  1801b. 

G.  sugar  at  6|^ ;  1251b.  A  sugar  at  5|^.  Received  check  on  Wyandotte  State 
Bank  in  payment,  on  which  bank  charged  ^q%  collection  for  cashing. 

Exercise  2 

(10.  Student  opened  set  of  books  with  the  following  :  —  Assets  :  merchandise,  $200  ; 
cash,  $2677.79 ;  S.  H.  Crane's  account,  $623.75  ;  W.  C.  Frazier's  account, 
$57.38.  Liabilities  :  Ramsey  «&  Day's  account,  $70  ;  J.  W.  Harvey's  account, 
$595.) 

11.  S.  H.  Crane  gave  me  a  draft  at  30  days  from  date  for  $420  on  J.  M.  Husted,  which 

he  paid,  less  discount,  by  check  on  Union  National  Bank.  Bank  charged  for 
cashing  check  jL%  collection. 

13.  J.  W.  Harvey  drew  a  draft  on  me  at  20  days'  sight  for  $380,  favor  of  himself. 

I  paid  it,  less  discount,  by  remitting  a  bank  draft  bought  at  Commercial 
National  Bank  for  cash  at  \%  exchange. 

14.  Bought  of  Ramsey  &  Day  invoice  of  merchandise,  $964.     Gave  them  a  draft  pur- 

chased at  Commercial  National  Bank  for  cash,  $475,  at  |%  exchange  ;  balance 
on  account. 

15.  Sold  W.  C.  Frazier  on  account,  18  yd.  black  crape  at  $4  ;  16  yd.  black  cloth  at 

$5.25  ;  7  table  spreads  at  $2.25;  90  yd.  cashmere  at  $1. 

16.  Paid  advertising  bill  in  cash,  $14.50. 

17.  W.  C.  Frazier  gave  me  on  account,  check  on  Citizens'  National  Bank  for  $319.13, 

which  I  had  cashed  at  bank  at  -^^%  for  collection. 

17.  Sold  S.  H.  Crane  on  account,  3  bbl.  A  sugar,  750  lb.,  at  b\f  ;  60  gal.  golden  syrup 

at  75^;  6  bbl.  cranberries  at  $6.75  ;  75  gal.  maple  syrup  at  85^  ;  2301b.  G.  sugar 
at  Q\^. 

18.  Paid  freight  and  drayage  in  cash,  $21.45. 

20.  Sold  J.  C.  Nevins  for  cash,  5  yd.  brocade  silk  at  $1.15  ;  4  yd.  black  cloth  at  $5  ; 
9  yd.  blue  cashmere  at  $1. 

Exercise  3 

(20.  H.  C.  Kane  began  business  with  the  following  :  —  Assets :  merchandise,  $750 ; 
cash,  $2557.01  ;  S.  H.  Crane's  account,  $407.33.  Liabilities:  Ramsey  &  Day's 
account,  $559  ;  J.  W.  Harvey's  account,  $215.) 

20.  Sold  G.  M.  Slater  on  his  note  at  10  days,  with  interest,  80  yd.  blue  cashmere  at 

$1 ;  65  yd.  brocade  silk  at  $1.15;  40  yd.  black  cloth  at  $4.75;  15  yd.  black 
crape  at  $4.25. 

21.  Drew  a  draft  at  60  days  from  date  on  S.  H.  Crane  for  $280,  favor  of  Ramsey  & 

Day,  and  remitted  it  to  them  on  account,  less  discount. 

22.  Bought  at  Commercial  National  Bank,  draft  for  $200  cash,  paying  \%  exchange, 

and  remitted  it  to  J.  W.  Harvey  on  account. 

23.  Bought  of  Ramsey  &  Day  on  account,  invoice  of  merchandise,  $1070. 

24.  Sold  E.  T.  Ingham  300  lb.  G.  sugar  at  6^^  ;  9  bbl.  A  sugar,  2250  lb.,  at  b\^  ;  150 

gal.  golden  syrup  at  75^;  140  gal.  maple  syrup  at  85^.  Received  check  on 
Union  National  Bank  for  $125,  on  which  collection  was  yV%j  balance  on 
account. 

25.  Bought  at  Commercial  National  Bank,  a  draft  for  $500  at  \%  exchange,  and 

remitted  it  to  Ramsey  &  Day  on  account. 


108    ,  Comprehensive  Bookkeeping 

August,  190-. 

27.    S.  H.  Crane  gave  me  on  account,  a  check  on  National  Bank  of  Commerce  for 
$340,  on  which  bank  charged  -^^%  collection. 

29.  Paid  freight  charges  in  cash,  $23.90. 

30.  Received  of  J.  M.  Slater  check  on  Union  National  Bank  for  note  of  20th  inst.  and 

interest,  bank's  charge  for  collecting  check  being  j-\j%. 

31.  Paid  rent  in  cash,  |35. 

,       ,^^  Exercise  4 

September,  190-. 

(1.    Student  and  H.  R.  Camp  commenced  a  partnership  business,  profits  and  losses 

to  be  shared  equally.     Student  invested  merchandise,  $1150 ;  cash,  $105.53  ; 

E.  T.  Ingham's  account,  $244.13.     H.  R.  Camp  invested  cash,  $2564.13,  and 

owed  on  account,  Ramsey  &  Day,  $851.80  ;  S.  H.  Crane,  $212.67.) 

1.  Bought  of  John  Wilson  property  in  which  business  is  conducted  for  $2800.  Paid 
cash,  $1200,  and  gave  note  at  00  days,  with  interest,  for  balance. 

3.  Received  of  E.  T.  Ingham  draft  at  20  days'  sight  for  $200  on  C.  H.  Moore,  which 
he  accepted. 

6.   Accepted  Ramsey  &  Day's  draft  at  30  days'  sight  for  $390,  favor  of  themselves. 

5.  Received  of  E.  T.  Ingham  on  account,  check  on  Traders'  State  Bank,  $185,  col- 

lection being  ^^%. 

6.  Sold  S.  H.  Crane  2401b.  G.  sugar  at  Q\^  ;  1801b.  maple  sugar  at  ^^  ;  60  gal.  maple 

syrup  at  85^ ;  15  bbl.  flour  at  $6.     Received  check  on  Wyandotte  State  Bank 
for  $110,  collection  being  ■^q%  ;  balance  on  account. 

7.  Purchased  draft  at  Commercial  National  Bank  for  $360  at  \%  exchange  and 

remitted  it  to  Ramsey  &  Day  on  account. 

8.  Bought  of  J.  W.  Harvey  on  account,  invoice  of  merchandise,  $836.40. 

11.    C.  H.  Moore  prepaid  draft  of  3d  inst.,  less  discount,  by  check  on  Union  National 
Bank,  on  which  the  collection  was  ^o%. 

11.  Sold  E.  T.  Ingham  on  account,  60  yd.  black  satin  at  $1.20 ;  25  yd.  bleached 

damask  at  $1 ;  75  yd.  brocade  velvet  at  $3. 

12.  Paid  freight  in  cash,  $19.70. 

13.  Drew  sight  draft  on  E.  T.  Ingham  for  $125,  favor  myself  (or  ourselves),  and  had 

it  cashed  at  bank,  less  collection  at  -^q%. 

14.  J.  W.  Harvey  drew  a  draft  on  me  (or  us)  at  15  days'  sight  for  $245,  favor  of 

Jones  &  Abbot,  which  was  paid,  less  discount,  by  a  draft  purchased  at  the 
Commercial  National  Bank  at  \%  exchange. 

14.  Paid  cash  for  stationery,  etc.,  $7.45. 

15.  Sold  S.  H.  Crane  on  account,  50  yd.  black  satin  at  $1.10  ;  45  yd.  bleached  dam- 

ask at  $1  ;  27  yd.  brocade  velvet  at  $3. 
15.   Paid  interest  due  to  date  on  note  of  1st  inst.  in  cash. 


Exercise  5 

(15.  J.  C.  Nesbit  and  H.  R.  Camp  began  business,  profits  and  losses  to  be  shared 
equally.  J.  C.  Nesbit  invested  real  estate,  $2800;  cash,  $897.79,  and  owed  on 
note  of  the  1st,  $1600 ;  on  acceptance  of  the  5th,  $390.  H.  R.  Camp  invested 
merchandise,  $1225;  cash,  $554.06;  S.  H.  Crane's  account,  $30.53,  and  owed 
Ramsey  &  Day  on  account,  $101.80.) 

17.  Prepaid  acceptance  of  the  5th  inst.,  less  discount,  by  draft  purchased  at  Commer- 

cial National  Bank  at  \%  exchange. 

18.  Gave  Ramsey  &  Day  a  draft  at  10  days  from  date  on  S.  H.  Crane  for  $100. 


Collection  and  Exchange  109 

September,  190-. 

19.  Sold  S.  H.  Crane  on  account,  90  yd.  cashmere  at  $1 ;  40  yd.  bleached  damask  at 

$1.10  ;  36  yd.  brocade  velvet  at  $3. 

20.  Paid  taxes  in  cash,  $13.48. 

21.  Bought  of  J.  W.  Harvey  invoice  of  merchandise,  $756.25.     Gave  him  draft  for 

$360,  purchased  at  Commercial  National  Bank  at  \%  exchange ;  balance  on 
account. 

22.  Sold  W.  C.  Frazier  150  lb.  G.  sugar  at  6i^;  25  gal.  maple  syrup  at  80^  ;  25  bbl. 

flour  at  $6  ;  80  gal.  golden  syrup  at  75 p^.     Received  check  on  Merchants'  Bank 
for  $190,  on  which  collection  was  ^q%  ;  balance  on  account. 
22.    Paid  freight  bill  in  cash,  $15.60. 

24.  Sold  J.  S.  Dawson  50  yd.  brown  satin  at  $1.05 ;  35  yd.  blue  cashmere  at  $2.60 ; 

21  yd.  brocade  velvet  at  $3.  Received  in  payment  a  draft  at  30  days'  sight 
on  J.  ri.  Skinner,  which  he  paid,  less  discount,  by  check  on  Merchants'  Bank, 
on  which  collection  was  ^■^%. 

25.  Paid  cash  for  stamps  and  stationery,  $8.50. 

25.  Prepaid  J.  W.  Harvey's  draft  at  30  days'  sight  for  $275,  favor  of  M.  A.  Brisbon, 

less  discount,  by  draft  purchased  at  Commercial  National  Bank  at  \%  exchange. 

26.  Received  of  W.  C.  Frazier  on  account,  draft  at  20  days'  sight  on  B.  R.  Stone  for 

$49.38,  which  he  accepted. 

27.  S.  H.  Crane  paid  balance  of  his  account  by  check  on  Union  National  Bank, 

collection  being  -^f^%. 
2*8.   Bought  draft  at  Commercial  National  Bank  for  $120  at  \%  exchange  and  re- 
mitted it  to  J.  W.  Harvey  on  account. 

28.  Received  of  B.  R.  Stone  for  his  acceptance  of  26th  inst.,  less  discount,  a  check  on 

Wyandotte  State  Bank,  charge  for  collecting  being  10  ^. 

29.  Paid  in  cash  interest  on  note  of  1st  inst.  accrued  since  15th. 
Inventories :  real  estate,  $2800  ;  merchandise,  $1275. 

Balances  :  cash,  $881.80;  bills  payable,  $1600 ;  Ramsey  &  Day,  Cr.,  $1.80. 


SINGLE   ENTRY 

In  double  entry,  the  ledger  contains  all  the  assets,  liabilities,  profits, 
and  losses  of  the  business,  except  the  inventories.  In  single  entry,  the 
ledger  contains  only  that  part  of  the  assets  and  liabilities  shown  by  the 
personal  accounts.  It  contains  none  of  the  profits  or  the  losses. 
Hence  single  entry  is  not  so  complete  as  double  entry.  .  Neither  does 
it  afford  the  checks  against  errors  that  double  entry  does.  Those, 
however,  who  desire  a  comprehensive  knowledge  of  bookkeeping  should 
know  something  of  single  entry.  And  some  may  wish  to  teach  it,  even 
in  preference  to  double  entry.     Hence  the  forms  for  it  are  given. 

THE  DAY-BOOK 

In  single  entry,  the  day-book,  as  a  general  rule,  contains  a  record 
of  only  those  transactions  in  which  persons  are  debited  or  credited. 
The  entries  are  not  arranged  the  same  way  as  in  double  entry,  only  one- 
half  the  usual  journal  entry  being  made.  And  to  indicate  whether  the 
person  is  debited  or  credited  the  abbreviation  Br.  or  Or.  is  written  at 
the  right  of  the  wide  column  on  the  same  line  with  the  name.  By 
examining  the  form  given  on  the  opposite  page,  no  special  difficulty 
need  be  experienced  in  writing  up  this  book.  The  transactions  are 
the  same  as  those  recorded  on  pages  22  and  23  so  far  as  they  would  be 
recorded  in  a  single  entry  day-book,  excepting  that  the  one  for  Janu- 
ary 30  is  omitted. 

The  rule  for  debiting  and  crediting  applies  the  same  as  in  double 
entry ;  and  the  posting  is  done  in  the  same  manner  as  in  double  entry. 

Note.  If  it  is  preferred,  the  same  form  of  day-book  may  be  used 
in  single  entry  as  in  double  entry,  omitting  the  transactions  which  do 
not  properly  belong  to  single  entry.      [See  page  22.] 

THE   CASH-BOOK 

In  the  cash-book  is  kept  a  record  of  all  cash  received  and  paid  out, 
but  usually  no  posting  is  done  from  it.  On  page  112  is  given  a  form 
of  single  entry  cash-book,  using  the  cash  items  of  the  transactions 
recorded  on  pages  22  and  23. 

110 


Single  Entry 


111 


^Inatb  Snytjbj  hciy-Baa^, 


January  1,  190- 

Student 

Cr. 

3250 

For  net  investment  as  follows :  - 

— 

Cash                     2500.00 

Mdse.                    U50.00 

3950.00 

Owed  on  notes  outstanding 

700.00 

Net  investment 

3250.00 

-2- 

J.  M.  Steele 

Cr. 

40  bbl.  Flour 

3.60 

lU 

-3- 

S.  E.  Avery 

Dr. 

10  bbl.  Flour 

4.20 

42 

120  bu.  Wheat 

.90 

108 

150 

-4- 

, 

R.  S.  Brown 

Cr. 

60  bbl.  Flour 

3.50 

210 

280  bu.  Wheat 

.60 

168 

ISO   "    Oats 

.15 

19 

50 

397 

50 

-5- 

J.  M.  Steele 

Dr. 

100 

Paid  him  cash  on  % 

-8- 

S.  E.  Avery 

Cr. 

125 

Received  cash  on  % 

-lo- 

ll. E.  Henry 

Dr. 

25  bbl.  Flour 

4.20 

105 

80  bu.  Wheat 

.90 

72 

120   "    Oats 

.20 

24 

201 

-15- 

J.  M.  Steele 

Cr. 

1200  bu.  Corn 

20^ 

240 

-Dr.- 

Paid  him  cash  on  above 

200 

-18- 

S.  E.  Avery 

Dr. 

60  bu.  Wheat 

90^ 

54 

Jfi   ''    Oats 

20  i^ 

8 

200   "    Corn 

25^ 

50 

112 

-25- 

R.  S.  Brown 

Dr. 

297 

50 

Paid  cash  on  % 

-26- 

S.  E.  Avery 

Dr. 

Jfi  bu.  Wheat 

.90 

36 

20  bbl.  Flour 

4.20 

84 

120 

112  Comprehensive  Bookkeeping 

Here  are  given  the  day-book  entries  for  a  more  extended  investment. 

January  1,  190- 


Student                                                               Cr. 
For  7iet  investment  as  follows :  — 
Cash                                  2000.00 
Mdse.                                 1000.00 
J.  M.  Walsh  owes  on  %     2 4.0. 00 
a  M.  Colway   "      "    "      690.00     3930.00 
Oiced  on  notes  outstanding  JfiO.OO 
Owed  B.  a  Wiley  on  %       280.00       680.00 
Net  investment                           3250.00 
ti 
J.  M.  Walsh                                                     Dr. 
For  amount  he  owes  on  % 

V 

C.  M.  Cohvay                                                Dr. 

For  amount  he  owes  on  % 
ti 
B.  a  Wiley                                                      Cr. 

For  amount  due  him  on  % 

3250 

240 
690 
280 

00 
00 
00 

190-  Received       Paid 


Jan. 

1 

5 
8 
9 
10 

If 

Amount  invested 

Paid  J.  M.  Steele  to  api^ly  on  % 

Received  of  S.  E.  Avery  on  % 

Paid  one-half  month^s  rent 

Paid  note  due  to-day 

2500 
125 

100 

40 
500 

10 

Paid  interest  on  above  note 

26 

40 

12 

Paid  for  coal  for  use  of  store 

15 

20 

15 

Paid  J.  M.  Steele  in  part  for  corn  bought 
to-day 

200 

20 

Received  for  Mdse.  sold  S.  K.  Johnston 

46 

50 

20 

Received  ofB.  C.  Murdoch  for  his  note  due  to-day, 

25 

84-00;  interest  on  sayne,  4^^ 
Paid  R.  S.  Brown  on  % 

84 

27  55 

42 

9  2 

297 

50 

30 

Paid  R.  S.  Brown  balarice  due  him 

100 

127  9 

10 

31 

Balance,  Cash  on  hand^ 

1476 

82 

2  7  5  5 

92 

2755 

92 

2755 

92 

Feb. 

1 

Balaiice,  Cash  on  hand 

1476 

82 

1  To  be  in  red  ink. 

Single  Entry 


113 


Sometimes  in  the  single  entry  cash-book,  the  record  of  cash  re- 
ceived is  placed  on  the  left-hand  page ;  and  the  record  of  cash  paid, 
on  the  right-hand  page. 

THE   LEDGER 

The  single  entry  ledger  contains  accounts  with  persons  only,  and 
as  far  as  these  go  it  is  precisely  the  same  as  the  ledger  already  given 
on  pages  28-30.  As  there  are  no  profit  and  loss  accounts  in  the  single 
entry  ledger,  the  profit  or  the  loss  must  be  determined  from  some 
other  source.  When  this  is  determined,  it  is  entered  directly  in  the 
proprietor's  account.  The  proprietor's  account  would  then  appear  as 
here  shown. 

^tMcUnt 


Jan. 

1 
31 

Present  worth  ^ 

VTo  be  written 
in  red  ink. 

700 
3375 

82 

Jan. 

1 
31 

Net  profit 
Present  worth 

3950 
125 

82 

4075 

82 

4075 

82 

Feb. 

1 

3375 

82 

There  is  given  here  a  statement  from  the  illustrative  set  on  pages 
22-30  to  determine  the  profit  or  the  loss  as  it  would  be  determined 
if  that  set  had  been  written  by  single  entry. 


oftatbvtmvt;  Jd^tudij  3/ , 

f^O- 

1 

2 
3 

1 

2 
3 

Assets 
Fro7n  ledger  accounts 
S.  E.  Avery 
H.  E.  Henry 
From  cash-book.     Balance  on  hand 
Mdse.  inventory 

Total  assets 

Liabilities 
From  ledger  account 

J.  M.  Steele 
From  bill-book.     Notes  outstanding 
Unpaid  rent 

Total  liabilities 

Present  ivorth 
Students  net  investment 

Net  profit 

257 

201 

U76 

1765 

82 

3699 

324 

82 

84 

200 

40 

3375 
3250 

82 

125 

82 

114 


Comprehensive  Bookkeeping 


CHANGING  FROM   SINGLE   TO   DOUBLE   ENTRY 

When  it  is  decided  to  change  a  set  of  books  from  single  entry  to 
double  entry,  the  assets  and  liabilities  not  shown  by  the  ledger  must 
be  determined.  Accounts  are  then  opened  in  the  ledger  with  these 
additional  assets  and  liabilities,  such  as  bills  receivable,  bills  payable, 
cash,  merchandise,  etc.  These  items  may  be  entered  without  first  being 
recorded  in  some  other  book.  As  the  ledger  now  shows  all  the  assets 
and  the  liabilities  of  the  business,  it  will  be  in  balance.  Hence  it  may 
be  well  to  take  a  trial  balance  to  be  sure  that  no  omissions  have  been 
made.  Of  course,  at  the  time  this  change  is  made,  the  proprietor's 
account  must  be  caused  to  show  its  present  Avorth. 

If  the  record  of  the  transactions  on  pages  22  and  23  had  been 
written  up  by  single  entry,  the  personal  accounts  would  appear  as 
they  are  given  in  the  ledger  on  pages  28-30.  Then  if  on  February  1 
the  books  had  been  changed  to  double  entry,  the  accounts  containing 
the  additional  assets  and  liabilities  may  be  opened  as  shown  here. 


Feb. 

1 

On  hand  per  inv. 

1765 

^dQ^Ay 


Feb. 

1 

On  hand  per  C.  B. 

U76 

82 

ISltU 

'  S^CiJCi(>tb 

Feb. 

1 

Outstanding  per  B.B. 

200 

SET  X  A.     EXERCISES   IN    CHANGING   FROM   SINGLE   TO 

DOUBLE   ENTRY 


Suggestion.  If  the  student  has  not  already  had  some  experience  with  single  entry, 
it  may  be  well  for  him  to  do  some  work  in  that  before  proceeding  with  this  set.  Any  of 
the  preceding  sets  will  afford  material  for  such  practice. 


Changing  fkom  Single  to  Double  Entry  115 

Exercise   1 

Write  by  single  entry. 
January,  190-. 

1.    J.  M.  Bronson  began  business  with  cash,  $1800  ;  notes  on  hand,  $800  ;  S.  M.  Blue 
owed  him  on  account,  $240. 

1.  Bought  Invoice  of  merchandise  for  cash,  $830. 

2.  Sold  B.  C.  Payne  bill  of  goods  on  account,  $64.25. 

3.  Sold  L.  H.  Hadden  merchandise  on  account,  $92.16. 

4.  S.  M.  Blue  paid  cash  on  account,  $175.  "•"  ' 

5.  Sold  T.  N.  Trout  bill  of  goods,  $164.30.    Received  cash,  $90  ;  balance  on  account. 

6.  Received  cash  on  a  note,  $450. 

8.  Sold  L.  H.  Hadden  on  account,  bill  of  merchandise,  $68.44. 

9.  Sold  S.  M.  Blue  merchandise  on  account,  $118.45. 

10.  Received  cash  of  B.  C.  Payne  on  account,  $50. 

Exercise   2 

11.  Changed  books  to  double  entry.     Assets  not  shown  by  ledger:  merchandise  on 

hand,  $350  ;  cash,  $1735  ;  notes  on  hand,  $350. 

12.  Sold  B.  C.  Payne  bill  of  goods  on  account,  $74.20. 

13.  L.  H.  Hadden  paid  cash  on  account,  $80. 

15.  Paid  cash  for  drayage,  $3.75. 

16.  Sold  S.  M.  Blue  merchandise  on  account,  $49.80. 

17.  Sold  merchandise  to  R.  A.  Beaver,  receiving  note  in  payment,  $120. 

18.  Received  cash  of  S.  M.  Blue  in  full  of  account. 
20.    Sold  T.  N.  Trout  merchandise  on  account,  $28.65. 
Merchandise  all  sold. 

Exercise   3 
AVrite  by  single  entry. 

February,  190-. 

1.  S.  B.  Wallace  began  business  investing  merchandise,  $500 ;  cash,  $1200  ;  L.  A. 

Bradley's  account,  $350,  and  owed  J.  A.  King  on  account,  $275. 

2.  Sold  merchandise  to  J.  C.  Leroy  on  account,  $89.70. 

3.  Sold  B.  P.  Ardrey  merchandise,  $94.20.    Received  cash,  $40 ;  balance  on  account. 

4.  Paid  cash  for  stationery  and  sundry  expenses,  $17.05. 
6.    Sold  T.  M.  Stafford  merchandise  on  account,  $42.30. 
6.    Paid  J.  A.  King  cash  on  account,  $190. 

8.  Sold  B.  P.  Ardrey  merchandise  on  account,  $29.80. 

9.  J.  C.  Leroy  paid  cash  in  full  of  account. 

15.  Sold  T.  M.  Stafford  bill  of  goods  on  account,  $38.90. 

Exercise  4 

16.  Changed  books  to  double  entry.     Assets  not  shown  by  ledger  of  Exercise  3: 

merchandise,  $225  ;  cash,  $1122.65. 

17.  Sold  merchandise  to  B.  P.  Ardrey  on  account,  $48.90. 

18.  Bought  merchandise  of  J.  A.  King  on  account,  $460. 
20.    Received  cash  of  B.  P.  Ardrey  on  account,  $35. 

23.  Sold  merchandise  to  J.  C.  Leroy  on  account,  $72.30. 

24.  Paid  freight  bill  in  cash,  $9.80. 

25.  Sold  merchandise  to  B.  P.  Ardrey  on  account,  $56.25. 

26.  Paid  J.  A.  King  cash  in  full  of  account. 

27.  Paid  rent  in  cash,  $20. 
Merchandise  inventory,  $550. 


116  COMPKEHENSIVE    BoOKKEEPI:NG 

Exercise   5 

Write  by  single  entry. 
March,  190-. 

1.  L,  C.  Todd  began   business  with  cash,   $1600 ;    merchandise,   $1000 ;    account 

against  D.  L.  Wooley,  $420,  and  owed  on  note,  $600. 

2.  Bought  invoice  of  merchandise  of  L.  L.  Spencer  on  account,  $245. 

3.  Sold  D.  L.  Wooley  merchandise  on  account,  $54.25. 

4.  Sold  B.  C.  Hastings  merchandise  for  cash,  $108.40. 

5.  Bought  store  and  lot  for  $900,  and  gave  note  in  payment. 

6.  Paid  freight  and  drayage  in  cash,  $13.50. 

9.   Sold  J.  K.  Jones  merchandise,  $138.60.    Received  cash,  $50 ;  balance  on  account. 
10.    Sold  D.  L.  Wooley  merchandise  on  account,  $291.70. 

12.  Paid  L.  L.  Spencer  cash  on  account,  $180. 

13.  Sold  B.  C.  Hastings  merchandise  on  account,  $48.96. 
16.   D.  L.  Wooley  paid  cash  on  account,  $145. 

Exercise   6 

16.  Books  to  be  changed  to  double  entry.    Assets  and  liabilities  not  shown  by  ledger 

as  follows: — Assets:  real  estate,  $900;  merchandise,  $625  j   cash,  $1709.90. 
Liabilities :  notes,  $1500. 

17.  Sold  B.  C.  Hastings  on  account,  merchandise,  $86.48. 

18.  Paid  sundry  expenses  in  cash,  $21.80. 

20.    Sold  J.  K.  Jones  merchandise  on  account,  $54.40. 

23.  Paid  cash  on  note,  $500. 

24.  Sold  merchandise  to  D.  L.  Wooley,  $260.    Received  cash  for  $100 ;  balance  on 

account. 

25.  B.  C.  Hastings  paid  cash  on  account,  $150. 

26.  Paid  cash  for  labor  about  store,  $9.30. 

27.  Sold  merchandise  to  D.  L.  Wooley  on  account,  $79.90, 

29.  Paid  L.  L.  Spencer  balance  due  on  account. 

30.  Paid  water  rent  for  month  in  cash,  $5. 
Merchandise  inventory,  $200.    Real  estate  valued  at  $950, 


SET  X  B,     EXERCISES   IN   CHANGING   FROM   SINGLE   TO 

DOUBLE   ENTRY 

Buying  Price  List.— Flour,  $5  per  bbl.;  wheat,  50^  per  bu.;  corn,  17;?  per  bu. ;  oats, 

18^  per  bu. 
Selling  Price  List.— Flour,  $6  per  bbl. ;  wheat,  60;^  per  bu.;  corn,  22^  per  bu. ;  oats, 

22^  per  bu. 

Exercise   1 
January,  190-. 

1.  Began  business  with  cash,  $3000  ;  account  against  IT.  A.  Thomas,  $380 ;  note 
given  by  W.  C.  Hustoq,  dated  July  8  at  6  months,  $400 ;  note  given  by  A.  R. 
Camp,  dated  September  16  at  4  months,  $600 ;  note  given  by  A.  B.  Wylie, 
dated  November  21  at  60  days,  $300. 

1.    Bought  of  Landon  &  Co.  on  account,  250  bbl.  flour  ;  600  bu.  wheat. 

3.    Sold  J.  C.  Baxter  on  account,  80  bu.  wheat ;  90  bbl.  flour. 

5.    Bought  of  J.  L.  Bray  ton  1500  bu.  corn.    Paid  cash,  $50  ;  balance  on  account. 


Changing  from  Single  to  Double  Entry  117 

January,  190-. 

6.    Sold  H.  A.  Thomas  on  account,  40  bbl.  flour  ;  400  bu.  corn  ;  120  bu.  wheat. 
8.    Received  cash  for  note  due  to-day,  $400. 

8.  Sold  for  cash  20  bbl.  flour ;  150  bu.  corn. 

"9.    Received  cash  of  H.  A.  Thomas  on  account,  $175. 

9.  Sold  J.  C.  Baxter  on  account,  400  bu.  wheat. 
10.   Paid  Landon  &  Co.  cash  to  balance  account. 

Exercise   2 

(11.  Changed  books  to  double  entry,  having  following  not  shown  on  ledger:  cash, 
$2128;  notes  dated  September  16  and  November  21,  $900  [see  January  1]  ; 
100  bbl.  flour ;  950  bu.  corn. 
Or  began  business  with  the  preceding  and  the  following:  H.  A.  Thomas  owed 
$605  on  account  and  J.  C.  Baxter  owed  $828.  There  was  due  J.  L.  Brayton  on 
account,  $205.) 

12.  Sold  A.  B.  Campbell  on  account,  75  bbl.  flour ;  400  bu.  corn. 

13.  H.  A.  Thomas  paid  cash  on  account,  $200. 

13.    Bought  of  R.  A.  Boring  on  account,  800  bu.  oats  ;  300  bu.  corn. 

15.  Sold  J.  C.  Baxter  15  bbl.  flour ;  300  bu.  oats.    Received  of  him  cash  to  apply  on 

account,  $500. 

16.  Received  cash  for  note  due  to-day,  $600. 
16.  Paid  J.  L.  Brayton  cash  for  all  due  him. 
16.    Paid  freight  bills  in  cash,  $58.60. 

18.   Sold  H.  A.  Thomas  on  account,  10  bbl.  flour;  500  bu.  oats. 
20.    Paid  sundry  expenses  in  cash,  §85.90. 

Exercise  3 

(20.   Changed  books  to  double  entry,  having  the  following  not  shown  on  ledger  :  cash, 
$3078.50  ;  note  dated  November  21,  $300  [see  January  1]  ;  850  bu.  corn. 
Or  began  business  with  the  preceding  together  with  the  following  :  H.  A.  Thomas 
owed  on  account,  $575  ;  J.  C.  Baxter,  $484  ;  A.  B.  Campbell,  $538.     There 
was  due  R.  A.  Boring  on  account,  $195.) 
20.   Received  cash  for  note  due  to-day,  $300. 

22.   Gave  R.  A.  Boring  on  account,  note  at  30  days,  with  interest,  $150. 
22.   Bought  of  M.  A.  Ralston  for  cash,  200  bbl.  flour. 

24.  Sold  D.  A.  Kirk  on  account,  125  bbl.  flour  ;  400  bu.  com. 

25.  Paid  cash  for  freight  and  drayage,  $60. 

26.  Sold  A.  B.  Campbell  on  account,  250  bu.  corn. 

27.  Paid  sundry  expenses  in  cash,  $94,20. 

29.  Received  of  D.  A.  Kirk  cash  for  sale  of  the  24th. 

30.  Received  cash  of  A.  B.  Campbell  to  balance  account. 

31.  Paid  electric  light  bill  in  cash,  $17. 

Exercise  4 
February,  190-. 

(1.    Changed  books  to  double   entry,  having  following  not  shown  on  ledger :  cash, 
$3638.30  ;  75  bbl.  flour ;  200  bu.  corn ;  note  of  January  22  ;  accrued  interest 

on  same,  $ . 

Or  began  business  with  the  preceding  and  the  following: — There  was  owed  on 
account  by  H.  A.  Thomas,  $575  ;  by  J.  C.  Baxter,  $484.  There  was  due  R.  A. 
Boring  on  account,  $45.) 


118  Comprehensive  Bookkeeping 

February,  190- 

1.  Bought  of  A.  K.  Manning  on  note  at  60  days,  1000  bu.  wheat ;  750  bu.  oats. 

2.  Sold  A.  B.  Campbell  on  account,  25  bbl.  flour  ;  200  bu.  corn  ;  200  bu.  oats. 

3.  H.  A.  Thomas  paid  cash  on  account,  $385. 
3.  Paid  freight  and  drayage  in  cash,- $48.90. 

5.  Sold  D.  A.  Kirk  50  bbl.  flour  ;  400  bu.  wheat ;  300  bu.  oats.    Received  cash, 

$200  ;  balance  on  account. 

6.  Received  cash  of  J.  C.  Baxter  on  account,  $290. 

8.  Paid  cash  for  coal  for  office,  $25.40. 

9.  Sold  A.  B.  Campbell  on  account,  200  bu.  wheat ;  125  bu.  oats. 
10.    Received  of  H.  A.  Thomas  cash  to  balance  account. 

12.  Sold  A.  W.  Armstrong  for  cash,  40  bu.  wheat  ;  25  bu.  oats. 

13.  Bought  of  R.  A.  Boring  on  account,  400  bu.  corn. 

13.  Sold  A.  B.  Campbell  on  account,  300  bu.  wheat ;  200  bu.  corn. 

14.  J.  C.  Baxter  paid  cash  on  account,  $50. 

14.  Sold  R.  M.  Stevenson  for  cash,  60  bu.  wheat ;  200  bu.  corn  ;  100  bu.  oats. 

15.  Received  cash  of  D.  A.  Kirk  for  balance  due  on  account. 


Exercise  5 

(15.  Changed  books  to  double  entry,  having  following  not  shown  on  ledger :  cash, 
$5216.50  ;  notes  of  January  22  and  February  1  and  accrued  interest  on  note 
of  January  22. 
Or  began  business  with  the  preceding  and  the  following  :  J.  C.  Baxter  owed  on 
account,  $144  ;  A.  B.  Campbell,  $609.50.  There  was  due  R.  A.  Boring  on 
account,  $113.) 
17.  Bought  of  R.  A.  Boring  1500  bu.  oats  ;  750  bu.  corn.     Paid  cash,  $125  ;  balance 

.     on  account. 
17.   Sold  H.  S.  Colvin  on  note  at  30  days,  200  bu.  corn  ;  600  bu.  oats. 

20.  Sold  J.  C.  Baxter  on  account,  225  bu.  corn  ;  450  bu.  oats. 

21.  Paid  in  cash  note  and  interest  due  to-day  [see  January  22], 

21.  Prepaid  note  of  February  1  in  cash,  less  discount  to  maturity. 

22.  Paid  freight  and  drayage  in  cash,  $43.90. 

23.  Sold  D.  A.  Kirk  on  account,  150  bu.  corn  ;  200  bu.  oats. 

23.  Paid  R.  A.  Boring  balance  due  him  in  cash. 

24.  Received  cash  of  J.  C.  Baxter  on  account,  $95. 

24.  Bought  of  M.  S.  Crawford  for  cash,  240  bu.  wheat. 

24.  Sold  J.  G.  Carlisle  on  account,  180  bu.  wheat ;  125  bu.  corn  ;  80  bu.  oats. 

26.  Bought  of  R.  A.  Boring  on  account,  1000  bu.  corn. 

26.  Paid  sundry  expenses  in  cash,  $45.20. 

26.  Sold  for  cash  60  bu.  wheat. 

27.  Received  cash  of  J.  G.  Carlisle  for  sale  of  the  24th. 

28.  Paid  R.  A.  Boring  cash  for  purchase  of  the  26th. 
28.  Paid  clerk  hire  in  cash,  $45. 

Inventory  :  1050  bu.  corn  ;  170  bu.  oats. 

Balances:  cash,  $3784.48;  bills  receivable,  $176;  J.  C.  Baxter,  Dr.,  $197.50. 

Suggestion.  If  further  practice  is  desired  in  changing  from  single  to  double  entry, 
use  any  of  the  preceding  sets.  Write  one  or  more  exercises  of  the  set  by  single  entry. 
Then  change  the  ledger  to  double  entry  by  obtaining  from  the  opening  entry  of  the  next 
•exercise  of  the  set  the  assets  and  liabilities  not  shown  by  the  ledger. 


PRACTICAL    EXERCISES 

It  is  probable  that  comparatively  few  of  those  who  study  book- 
keeping in  the  schools  will  have  occasion  to  use  the  knowledge  gained 
in  keeping  a  complete  set  of  books  either  for  themselves  or  for  others, 
but  practically  every  one  will  have  occasion  to  keep  at  least  a  tempo- 
rary account  with  a  single  item.  A  convenient  plan  for  doing  this  is 
to  use  a  book  with  the  ordinary  journal  ruling,  placing  the  debit 
amounts  in  the  left-hand  money  column  and  the  credit  amounts  in  the 
right-hand  money  column.  (Indeed  this  plan  can  be  used  for  keeping 
accounts  by  complete  double  entry  by  setting  aside  a  page  for  each 
item,  and  making  the  original  entries  directly  in  the  accounts  to  which 
they  belong.)  This  plan  may  be  useful  especially  to  such  as  the 
farmer,  the  mechanic,  and  the  small  tradesman  who  do  not  care  for  a 
complete  set  of  accounts,  but  who  wish  a  simple  method  of  keeping 
accounts  with  special  items. 

It  is  recommended  particularly  that  those  in  the  rural  schools,  and 
in  the  grammar  schools  of  cities,  write  up,  on  this  plan,  a  number  of 
exercises  involving  transactions  with  a  single  item. 

In  writing  up  accounts  in  this  manner,  there  are  two  ideas  in  regard 
to  the  explanations :  one  is  to  make  them  as  brief  as  possible  and  to 
depend  upon  the  column  in  which  each  amount  is  placed  to  tell  whether 
it  is  a  debit  or  a  credit.  The  other  plan,  and  the  safer  one  for  those 
without  much  experience,  is  to  make  the  explanations  fuller  so  that  the 
nature  of  each  transaction  may  be  known  without  reference  to  the  col- 
umn in  which  its  amount  is  placed.  The  first  plan  is  illustrated  on  the 
next  page  in  the  account  with  E.  S.  Hibbard,  and  the  second  plan  in 
the  account  with  cash. 

The  two  accounts  on  the  next  page  are  made  up  from  material  of  this 
book,  and  the  one  on  page  121  is  from  other  material.  Following  these 
illustrations  are  a  few  exercises  which  the  student  may  write  up  in  this 
manner.  For  additional  practice,  material  may  be  had  by  using  some 
•of  the  preceding  exercises  in  this  text-book,  selecting  the  transactions 
that  involve  particular  items  ;  or  the  student  may  make  up  original 
matter.  In  doing  the  latter,  the  student  should  select  a  branch  of 
business  with  which  he  is  somewhat  familiar. 

119 


120 


Comprehensive  Bookkeeping 


190- 


€,  c/.  /-fMciut 


(Taken  from  Introductory  Set  B,  Exercises  1-3,  page  19) 

Dr. 


^d^Ay 


Cr. 


Jan. 

6 
10 
IS 

17 
20 
20 

15  hhl.  Salt                                               2.00 
25  hhl.  Flour                                             6.25 
50  hhl.  Salt                                               2.25 
SO  hhl.  Flour                                             6.50 
25  hhl.  Beef                                            U.00 
Cash 
Cash 
Balance 

SO 
156 
112 
195 
S50 

25 
50 

S50 
125 
368 

75 

843\75 

843 

75 

Jan. 

21 
2S 
26 
SO 

31 

Balance 

20  hhl.  Beef                                            10.50 

Cash 

SO  hhl.  Pork                                            12.25 

40  hhl.  Salt                                                1.50 

Balance 

368 
210 

S67 
60 

75 
50 

175 
831 

25 

1006 

25 

1006 

25 

(Taken  from  Set  X  B,  Exercises  3  and  4,  page  117) 


190- 

Received 

Paid 

Jan. 

20 
20 

22 

25 

Amount  on  hand 

Received  of  A.  B.  Wylie  for  note  due  to-day 

Bought  of  M.  A.  Ralston,  200  hhl.  Flour  at 

^5.00 
Freight  and  drayage 

3078 
300 

50 

1000 
60 

27 

Sundry  expenses 

94 

20 

29 

Received  of  D.  A.  Kirk  for  sale  of  the  24th 

838 

SO 

Received  of  A.  B.  Campbell  to  balance  % 

593 

31 

Electric  light  hill 

17 

31 

Balance 

3638 

30 

4809 

50 

4809 

50 

Feh. 

1 
3 

Balance 

Received  of  H.  A.  Thomas  on  % 

36S8 
385 

30 

S 

Freight  and  drayage 

48 

90 

5 

Received  of  D.  A.  Kirk  in  part  payment  for 
Mdse.  sold  him  to-day 

200 

6 

Received  of  J.  C.  Baxter  on  % 

290 

8 

Coal  for  office 

25 

40 

PRACTICAL  Exercises 


121 


190- 


Uycuttwruttarb   S^at(s.fo 


Exercise  1 

(Account  with  Charles  Baldwin) 
October,  190-. 

1.  Sold  him  10  lb.  maple  sugar  at  30^. 

3.  Bought  of  him  3  bu.  wheat  at  60^. 

5.  Worked  for  him  3  days  at  ^2. 

8.  Sold  him  4  bu.  apples  at  50^. 

10.  Bought  of  him  1  cow,  ^35. 

13.  Sold  him  8  chickens  at  30^  :  2  calves  at 

14.  Bought  3  gal.  syrup  at  25^. 
20.  Sold  him  2  bu.  corn  at  45;^. 

25.  Bought  18  gal.  molasses  at  25^. 

26.  Sold  him  team  of  horses,  $100. 
29.    Received  cash  for  balance  due. 


Exercise  2 
(Account  with  J.  H.  Stewart) 


Br. 


Cr. 


May 

15 
16 

25 

Preparing  ground 

Seed 

Hoeing 

3 
1 

50 

June 

10 

20 

Hoeing  and  weeding 
Hoeing 

2 

2 

50 

July 

Jf 

Sold  50  Melons 

15^ 

7 

50 

10 

"     20      " 

12'-J 

2 

50 

20 

"     70      " 

10^ 

7 

Aug. 

2 

u     gg       u 

8^ 

2 

40 

5 

"      60       " 

8^ 

4 

80 

5 

Expeiise  of  marketing 
Profit 

' 

2 
12 

75 
45 

U 

20 

U 

20 

5  cans  tomatoes  at  10<*. 


July,  190-. 

1.  Sold  him  10  bu.  apples  at  25^. 

2.  Bought  of  him  20  lb.  sugar  at  bf 

3.  Sold  him  6  doz.  eggs  at  15^'. 
5.    Sold  him  3  crates  blackberries  at  90^'. 

Bought  sundry  items  of  merchandise  per  bill,  §10. 

Paid  cash  on  account,  §3. 10. 

Sold  him  2  doz.  chickens  at  20;^^  each. 

Bought  30  lb.  sugar  at  bf. 

Bought  3  lb.  tea  at  Ibf  ;  5  lb.  coffee  at  25^. 

Sold  him  5  bu.  apples  at  20,<2^ ;  10  bu.  potatoes  at  80 jz^. 

Bought  sundry  items  of  merchandise,  |3.60. 

Received  of  him  cash,  $1.25. 
Determine  balance  due.     Which  one  owes  the  balance  ?    What  is  J.  H.  Stewart's 
occupation  as  indicated  by  this  account  ?     What  is  the  occupation  of  the  person  who  is 
keeping  the  account  ? 


18. 
19. 
20. 

21. 
23. 

28. 


122  Comprehensive  Bookkeeping 

Exercise  3 
(An  account  with  a  Flock  of  Chickens) 
March,  190- 

1.  Bought  incubator  and  supplies,  $10. 

3.  Bought  9  doz.  eggs  at  15^. 

4.  Put  eggs  in  incubator. 
27.    90  chickens  hatched. 

Bought  meal  for  chickens,  60f. 
April,  190-. 

2.  Bought  coops  for  chickens,  $2. 
10.    Bought  meal  for  chickens,  $1.20. 
21.    12  chickens  died. 

May,  190-. 

10.   Sold  10  chickens  at  30j?  each. 
15.  Bought  corn,  $1. 

29.  Sold  12  chickens  at  30^. 
June,  190-. 

3.  Sold  3  doz.  chickens  to  grocer  at  25f. 

5.  Sold  12  chickens  at  25^. 
Bought  corn,  50^. 

10.    Sold  8  chickens  at  30^. 
Determine  the  profit,  valuing  the  incubator  and  coops  on  hand  at  .$8. 

Exercise  4 
(Account  with  an  Orchard  for  Season  of  190-) 
March,  190-. 

1.    Pruning  old  orchard,  10  days  at  $1  per  day. 

4.  Bought  50  peach  trees  at  50;^^. 
20.    Bought  100  apple  trees  at  25f. 

30.  10  days'  labor  at  16f. 
April,  190-. 

5.  Bought  30  plum  trees  at  20^^'. 
2  days'  labor  at  $1. 

8.    Bought  spraying  ingredients,  .$3. 
12.    Labor,  $4. 

26.    Pruning  young  trees,  $12.50. 
May,  190-. 

30.   Sold  cuttings  for  grafts,  90^. 
June,  190-. 

5.    Sold  5  bu.  apples  at  $1. 
26.    Sold  20  bu.  apples  at  75^. 
July,  190-. 

20.  Sold  7  bu.  plums  at  80^. 

21.  Sold  16  bu.  apples  at  80^. 
24.    Sold  10  bu.  plums  at  70^. 

August,  190-. 

20.    Paid  for  hauling,  $7. 

SO.   Sold  50  baskets  of  peaches  at  25^. 


Practical  Exercises  123 

September,  190-. 

1.    Sold  5  bu.  peaches  at  80^. 
8.    Sold  12  bu.  peaches  at  90^. 
October,  190-. 

19.    Sold  30  bu.  apples  at  75^. 
30.    Sold  60  bu.  apples  at  90^. 
Paid  for  hauling,  $3. 
Determine  the  net  returns.     If  the  proprietor  spent  ten  days  of  his  own  time  on  the 
orchard  during  the  season,  how  much  did  he  receive  per  day  for  his  labor  above  the  total 
outlay  ?     What  would  be  his  wages  per  day,  if  the  cost  of  the  new  trees  (including  $8  of 
the  undesignated  labor)  is  deducted  from  the  expense  ? 

Exercise   5 

(Account  with  an  Ice  Cream  Stand) 
June,  190-. 

1.  Cost  of  erecting  stand,  $35.    Cost  of  license,  $1.50. 

2.  Bought  dishes  and  spoons,  $5. 

3.  Bought  covering  for  counter,  $1. 

4.  Bought  chairs,  $4  ;  glasses,  $1.20. 

8.  Bought  10  gal.  ice  cream  at  60^  ;  1  doz.  lemons,  30^  ;  10  lb.  sugar 

at  5^  ;  straws,  50;^^ ;  lemon  shaker  and  squeezer,  $1. 

9.  Received  for  one  day's  sales,  $5. 

10.  Received  for  day's  sales,  $4.50. 

11.  Bought  5  gal.  ice  cream  at  60^. 

12.  Received  for  day's  sales,  $7. 

13.  Received  for  day's  sales,  $5. 

15.  Paid  for  ice  for  two  weeks,  $1.80. 

18.  Bought  10  gal.  ice  cream  at  60f. 

19.  Received  for  day's  sales,  $10. 

20.  Sold  stand  and  supplies  for  $65. 

21.  Determine  the  profit  or  the  loss. 

Exercise   6 
(Account  with  a  Bird  Home) 
March,  190-. 

1.    Purchased  50  birds,  $30  ;  3  sacks  seed  at  $3. 
3.   Paid  rent  for  March,  $16.     Bought  cages,  $25. 
8.    Sold  one  canary,  singer,  $1.25  ;  3  parrots  at  $5  ;  2  redbirds  at  $4. 
15.    Bought  3  lb.  sulphur  at  10/'. 
18.    Bought  20  pigeons  at  50^. 

20.  Paid  water  bill  to  date,  $3. 
29.   Paid  for  coal,  $4. 

April,  190-. 

1.  Paid  rent  for  month,  $16. 

2.  Sold  16  quail  at  65f. 

3.  Bought  sack  seed,  $3. 

8.    Sold  2  canaries  at  $1.25 ;  4  blackbirds  at  $1  ;  6  mocking  birds  at 

$6  ;  8  parrots  at  $10. 
10.   Bought  12  assorted  birds,  nestlings,  at  5f. 

21.  Sold  14  pigeons  at  $1.50. 


124  COMPKEHENSIVE   BOOKKEEPING 

May,  190-. 

1.    Paid  rent  for  May,  $16. 

6.    Bought  seed,  $1.50. 

8.    Bought  sulphur,  20^. 
15.    Paid  for  coal,  $3. 
24.  '  Sold  6  pigeons  at  15,^. 
31.    Determine  the  profit,  valuing  birds  and  supplies  remaining  at  $25. 

Exercise  7 

(Account  with  Opening  Riverview  Addition) 
April,  190-. 

1.   Paid  office  rent  one  month,  $10.     Paid  for  sign  boards,  $7. 

3.  Paid  for  circulars,  $2.    Paid  for  distributing  circulars,  $3. 

4.  Paid  for  advertisements,  $10, 

5.  Bought  horse  and  buggy,  $150. 

6.  Bought  2  bu.  corn  at  600. 

8.  Received  for  commissions  on  lots  sold,  $100. 

9.  Paid  for  rent  of  stable  for  2  weeks  at  50;^^. 
10.    Paid  for  telephone,  $2. 

12.  Received  for  commission,  $75. 

13.  Paid  for  advertisements,  $8.     Received  for  commission,  $20. 
18.    Bought  3  bales  of  hay  at  30^. 

20.    Received  for  commission  on  eight  lots  sold,  $200. 
30.    Bought  2  bu.  oats  at  00^. 
May,  190-. 

1.  Paid  office  rent  till  May  31,  $10. 

2.  Paid  for  telephone,  $2.    Received  for  commission  on  two  cash 

sales,  $60. 

5.  Paid  for  advertisements,  $25. 

6.  Received  for  commissions,  $80. 

10.   Received  for  commissions  on  balance  of  lots  sold,  $150.     Sold 

horse  and  buggy  for  $100. 
Determine  the  gain. 

Exercise  8 

The  memoranda  in  this  exercise  have  been  taken,  with  a  few  changes,  from  the  July, 
1904,  number  of  Education  in  Business,  published  at  Peoria,  111.  They  represent  the 
cash  accounts  for  one  month  of  each  member  of  a  family  of  four,  of  which  Theobald 
Woodbury  is  the  head,  and  when  written  up  as  above  described,  they  are  in  a  form  to 
submit  to  the  family  council  at  the  end  of  the  month  for  consideration  and  for  suggestion? 
for  the  following  month. 

Write  up  and  balance  each  account. 

(Theobald  Woodbury's  Cash  Account) 
June,  190-. 

1.    Received  my  salary,   $80.    Paid  to   Mother  for  expenses,  $35. 

Paid  Helen  her  allowance,  $5. 
4.    Paid  rent  of  house,  $15. 

8.    Received  of  John  Wilson  for  six  months'  interest  due  on  note, 
$7.40. 


Practical  Exercises  125 

June,  190-. 

12.    Paid  quarterly  subscription  to  church,  $15. 

18.  Paid  for  hat,  $2.50. 
20.    Paid  for  rake,  75^. 

30.   Paid  ice  bill,  $1.35.    Deposited  in  Savings  Bank,  $10. 

((Mrs.)  Mary  Woodbury's  Cash  Account) 
June,  190-. 

1.   Received  from  Father,  $35. 
4,    Paid  for  cook  book,  [>0f. 
7.    Paid  for  dress,  $10. 
15.   Paid  for  gloves,  $1.50. 
20.    Paid  subscription  to  magazine,  $2. 
30.    Paid  grocery  bill  for  month,  $20.83. 

(Helen  Woodbury's  Cash  Account) 
June,  190-. 

1.  Received  from  Father,  $5. 

2.  Paid  for  car  fare,  10^. 

4.  Paid  for  car  fare,  10^. 

5.  Paid  for  Sabbath  school,  25^. 

10.  Paid  for  car  fare,  10^.     Paid  for  shoes,  $2.50. 

12.  Paid  for  Sabbath  school,  Ibf. 

15.  Paid  for  car  fare,  15^,    Paid  for  ribbon,  50^. 

19.  Paid  for  Sabbath  school,  20^. 

25.  Paid  for  car  fare,  10^. 

29.  Paid  for  writing  paper,  25^. 

(Frank  Woodbury's  Cash  Account) 

(Frank,  not  being  needed  about  the  home  all  the  time  and  being  an  industrious  boy 
prefers  to  earn  his  own  money ;  hence  he  receives  no  allowance  from  his  father.) 

June,  190-. 

1.   Received  for  pulling  weeds  for  Mr.  Jones,  SBf. 

3.  Received  for  sprinkling  Miss  Jackson's  lawn,  25^. 

4.  Received  for  carrying  papers,  $5. 

5.  Paid  for  Sabbath  school,  lOj*. 
7.    Paid  for  suspenders,  40^. 

12.   Paid  for  Sabbath  school,  25^. 

16.  Received  for  painting  Mrs.  Bronson's  screens,  75^. 

18,  Paid  for  trousers,  $3.50. 

19.  Paid  for  Sabbath  school,  15^. 

22.    Received  from  Mr.  Harper  for  helping  in  store,  $1.15. 

26.  Paid  for  Sabbath  school,  25^. 

27.  Received  for  splitting  kindling  for  Uncle  George,  25;*. 

30.  Deposited  in  Savings  Bank,  $3. 


BUSINESS   FORMS 


BILL   OR  INVOICE 


Kansas  City,  Mo.,  Aug.  25,  190-. 


Mr.  James  L.  Scott, 

Rosedale,  Kansas. 


Bought  of 

W.  C 

.  Boyd  &  Co. 

20  lb.  A.  a  Sugar                                     9^^ 
8  "   Java  Coffee                   '                  40^ 
3  "   Y.  H.  Tea                                       48^ 

5  gal.  S.  H.  Syrup                                 70^ 

6  bu.  Potatoes                                        40  ^ 

7  lb.  Butter                                              22^ 
14doz.Eggs                              .                16^ 

Received  payment. 

W.  C.  Boyd  &  Co. 

By  H.  K.  S. 

1 

3 
1 

3 

2 
1 
2 

90 
20 

U 
50 
40 
54 
24 

16 

22 

PROMISSORY  NOTES 
INDIVIDUAL   NOTE 


$800.00  J^o 

Little  Bock,  Ark.,  fivtif  /O,  190.— 

Due  COivcf'UAt  <^,  190.- 

,.^.^.^~^~^.^sy^^^^kiAtif  cLoAf^ after  date,  for  value  received, 

J  promise  to  pay ja^n^t^  R.  c?emAi, or  order, 

'  100 

with  interest  from. clcLt& at  the  rate  of. a^ per  cent 

per  annum. 


126 


Business  Forms  127 


PARTNERSHIP  NOTE 


50  JVo... 

Topeka,  Kansas,  CUocf.  ^,  190--. 

Due. 


,of'i/xtif  doA^Qy after  date,  for  value  received, 

i{^&  promise  to  pay..^.^.^.^.^..^.^.^.^.^.^.^j.  (^.  ^^nXZ&u,^.^^ or  order, 

.-...-..-..-^.^.^.^.^.^.^-^S^cHcv  knAm^dvui  tA^&nty,-ilv-&  o/yicL  — Dollars, 

with  interest  from... WyotuA^iUf--. at  the  rate  of...&ufkt.--per  cent 
per  annum. 


JOINT  NOTE 


$  /^6.^5 

Pittsburg,  Kansas,  ^e/fit.  / , 

190. 

JYo 

Due 



^3'kl\ldf  clcLy-2^..^.^.^.^.^-^.^..^after  date. 

for 

value  received. 

W-&  promise 

to  pay                       ofa/m/w&l  fan&^,. 



.^.^.^.....^or  order. 

at 

c/l/i/O/^  (yfcitAxyyicit  foaA^k/,-^ 



Dollars, 

Mn&  kAiTici'v&cL  tavCu-QyVX'  oyyid  — ^ 

with  interest  from clcLt& at  the  rate 

of... 

^Cx>....per  cent 

per  annum. 

f^. 

c/.  &u^^. 

fd. 

fC.  ^kwi^k. 

128 


COMPKEHENSIVE    BOOKKEEPING 


JOINT   AND   SEVERAL  NOTE 


$200.76 

Cleveland, 

Ohio,  c^£^. 

20,  190. 

Jfo 

Due 

.^^^^^.^^^^ 

.^€.yv&  if&civ.-^.^..^ 

^after  date,  for 

value  received, 

W'&;  cyv  &itkeA, 

af  uQy,  promise 

to  pay R. 

c/,  fSvcymxyyi  V  ^o-., 

or  order,  at.^ 

..^.^.^^.^^.^.^,.^.^.^.^~^^of£^o-ncl  c/f'oitvo-Tvcvt  BoAvh, 



r-^inAt-a-  nAiA^^nA. 

100 

..at  the  rate 

Dollars, 
of. Q.e.v-£M.. per  eent 

with  interest  from.  _  _  _  £lat&.  _  _ 

jjer  annum. 

DEMAND  NOTE 


/  26.36  .Ao._ 

Kansas  City,  Kansas,  fuly^  8,  190--- 

Due. 


€ru  dsAyva/yid. for  value  received, J-... promise 

to  pay ...^.^.^.^.^.^.^.^.^.^.^.^.^.^.^.^...^W-.  (^.  /'fa.tit&d,^.^.^..^^^^.^^.^.^.^.^.^.^~^~^.^^^or  order, 

at^.^.,..^^.....^^..,..^..^,..^..^^^^^^  cAmtio-ncii  Sa/n^,..^.^...^..^.^....^.^....^^.^.^.,.^^ 

€.'yi&  kviAvcLh&d  tw-&nty-Qyi9C  a.'wd  — Dollars, 

with  interest  from  dat^^  at  the  rate  of  qa/?o  per  cent  per  annum, 

payahle  QyeAnA^-ayyiriAvattu. 

L.  m.  ^vaw-l^cyvd. 


Business  Forms  129 

EECEIPTS 
TO  APPLY  ON  ACCOUNT 


$^^.00 

Buffalo,  Jf.Y., 

jam.. 

/,  190.-. 

Received  of^ 

^X^^h^OTl,  ^ 

-c/tinetif- 

-jo-u^ 

Dollars, 

to  apply  on  account. 

/.  R. 

^M-tt  V  (^,  ' 

IN  FULL  OF  ACCOUNT 


$726.38  Buffalo,  K.Y.,  fcuw.  /,  190... 

Received  of..^.^.^.^.^.^.^.^..,....^.^.^^Raiyyl^V'ao-cl  V'  c^Wt^^^-...^...^-.,.^^.^^^.^^ 
...^..^.^....^.....^.^.^.^^Qj'&v-eMy  kwricivui  tw~£mZ'u-QA/?c  ayncL  —^-^-^.^-^.^.^.^.^.^..^Dollars, 

in  full  of  account  to  date. 

jo-kvu  R.  JSaLt&u. 


PAYMENT  ON  NOTE 


$  120.00 

Received 

( 
a^  Ou  ^dxticit 

of 

Buffalo,  K.Y.,  CUcf 
B.  ^.  €v-&vm.&u&v 

/O,  190... 

{^(t/if  cLo-ttoLVQy,  'p.aAfa.{>'t&  to-  ruA^Qy&i^. 

.    Dollars, 

^o-vcLcyjt. 

130  COMPKEHENSIVE    BOOKKEEPING 

DUE  BILLS 
PAYABLE   IN   MONEY 


$6^.  ^6  Topeha,  Kansas,  €et.  /,  19 O... 


on  demand. 


f.  ^.   ^i{yyi&if. 


PAYABLE  IN   GOODS 


2/.^0  Topeha,  Kansas,  U/^d  /2,  190... 

Due ^.^.^.^^T^i/^-UI   (O.  3^VaA>-iAy, 

,<S^W'&nty'-(y}'i&  a/nd  j^ Dollars, 


in  goods  from  our  store. 


cAa^.vU.  V  (Eo-. 


OKDERS 
ORDER  PAYABLE  IN  MONEY 


$20.00 

Topeha, 

Kansas,  (Z^vit  ^,  190.- 

jtamv&Qy 

itaAftoA., 

8^6  fCoA^QyOA^  C&V 

^&., will  please  pay  the 

hearer  Vw-em^ 

dattayVQy, 

and  charge 

the 

same  to  my  account. 

Business  Forms  131 


ORDER   PAYABLE  IN   GOODS 


$  f^.OO  Pittsburg,  Kansas,  fu/yL&  6,  190— 

-.-€.  /if.  CLncLv&w^,  62/  BvaacOw-oAf^.-.will  please  deliver  to 
...Qfa^mAi&t  lO-itoyO^'i- -  goods  to  the  amount  of.^Jyw-Syta>-&  cLMc^Wy,.-- 
and  charge  the  same  to  my  account. 


CHECK 


J{o.  68 

Kansas  City,  Kansas,  fiotaf  /O,  190 

— 

Wist 

Commercial  National  33an{t 

Fay 

to 

W^.  €.  ^alko-uA^,                   or  order. 

$f  86.60 

^^^d'YiSy  koim^cLv&cL  tiaktu-^v?c  aA^ci  —^.^.^...-^-^-^^-^^^-^^^ 

^Dollars. 

/         /                                 100 

DRAFTS 
SIGHT   DRAFT 


Omaha,  J^eb.,  c/tav-.  / ,  190.— 

Due. 


Clt  Qyiakt  pay  to  the  order  of..--  f.  /if.  /fdmA^ltcyyv, $  6<^6. 00 

.c^vv-&  kwyidv&cL  TvLn&tA^  am^ci  ^^^^^^•^.^^-^..•^^^^^^Dollars, 
value  received,  and  charge  to  the  account  of 

To  o/aAn/ic&l  L.   LoaavuL,  jo^e/JdA  ^.  /ifcn/yi. 

/Cam^ci^  (^ity,  Trio. 


132 


Comprehensive  Bookkeeping 


1 

^^ 

c^ 

^ 

3 

1 

:£ 

^^ 

> 

1 

^ 

1 

TIME   DRAFT,   AFTER   SIGHT 

Bangor,  Me.,  S&l^.  22, 

190. 

:n'o 

Due 

^ ...^..^.^.^Cit  tAV-&nt/u  cld^fo!  oAxjkt-^^ 

^..^.^ 

.^^^pay  to 

^akyv  71'^.  ^Xow&, 

^or  order, 

$2^8.78 

S^w-a  kiA.nclv&cl  javtif-tJtv&& 

a-'ytcL 

78 
100 

_  Dollars, 

value  received,  and  charge  to  the  account  of 

To  faffvle^  V  ^., 

^o-nao.a^a'yi 

V  ^0.. 

(^t&u&lcmd;  €.kia. 

TIME   DRAFT,   AFTER   DATE 


Detroit,  Mich.,  THoAf  16,  190 


JS^o 

Due 

pay  to  the 

order  of c/.  /C.  ^cwit&Co. $f  68.^5 

([ln&  kion^cLv&cL  QyV9ctu-&takt  a^ncL  — Dollars, 

value  received,  and  charge  to  the  account  of 

To  R.  ^.  Bo-vu^&v,  CI.  Id.  ^aUiv-dL 


DRAFT,    TWO   PARTIES 


Washington,  D.C.,  €^L 

/2, 

190^ 

Jfo. 
Due 

_ 

^^^.^ 

S^kivtj  cLciif^  aj,t&v  clat&.^.^.^^ 

.pay 

to  the  order  of 

vnfOyelt; 

^$^8.00 

._-      -        ^rAiA^F.tu-FAnkt  dncL  — ..^ 

Dollars, 

value  received,  and  charge  to  the  account 

of 

To  ^. 

s>. 

Bali  V-  (^a., 

10-^^. 

W-.  lO^u&i/-. 

JSciltU^vave.,  Tnd. 

Business  Forms 


133 


A  FORM   OF  BANK   DRAFT 


Wi^t  ffiommerctal  National  Banft 

J{o.  S7^6 

Kansas  City, 

Kansas,  of&^t.  /6,  190^ 

Pay  to  the  order  of c/.  ^. 

yMto^o-n^,-^.^ 

$^^.26 

cACn&tAf- f(yiiv  and  — . 

.^^^^.-^^^^^^^ 

Dollars. 

To  itk&  W^&Qte^iru  o/tatlanat  fSa.nk, 

€.  L. 

Bvo^a/w-, 

o/teA^  yo-ik,  cA.lf. 

^ClQ./li&V. 

A  FORM  OF  DEPOSIT   TICKET 
DEPOSITED   WITH 

THE  HOME  STATE  BANK 

BOSTON,  MASS. 
By 
._._. 190__. 

PLEASE   LIST  EACH   CHECK   SEPARATELY 


Currency 
Silver    . 
Gold      . 


CHECKS   AS  FOLLOWS: 

(Name  of  Bank  if  Payable  in  Boston 
otherwise  City  in  which  Payable) 


Total,  % 


DOLLAES 


CTS. 


SEE  THziT   ALL  CHECKS   AND   DRAFTS  ARE   INDORSED 


LEDGER   SPACE 

The  following  table  gives  the  ledger  space  that  is  required  for  the 
exercises  of  the  text-book.  The  number  of  lines  given  for  each  exer- 
cise includes  space  for  balancing  the  accounts.  Two  or  three  lines 
should  be  added  to  allow  for  space  between  accounts,  when  each  exer- 
cise is  written  as  an  independent  set.  When  two  or  more  exercises  are 
grouped,  the  sum  of  the  lines  for  the  exercises  included  in  the  group 
should  be  taken  before  adding  the  two  or  three  lines  for  space  between 
the  accounts.  If  accounts  are  not  to  be  balanced  at  the  close  of  cer- 
tain exercises,  one  or  two  lines  may  be  deducted  from  the  sum  for  each 
exercise  in  which  it  is  not  intended  to  balance  the  accounts. 

The  number  of  lines  given  for  each  account  is  the  number  that  will 
be  required  when  the  sets  are  written  up  in  the  journal.  When  the 
cash-book  is  used,  if  a  cash  account  is  kept  in  the  ledger,  the  number 
of  lines  for  it  can  be  determined  by  the  student,  and  of  course  will  be 
different  from  that  given  in  the  table.  Also  when  special  columns 
are  provided  for  any  items,  the  amount  of  space  required  for  them  will 
not  be  that  given  in  the  table,  but  can  be  determined  by  the  student. 

In  the  accounts  with  such  items  as  interest  and  discount,  the  space 
is  given  for  them  separately.  It  is  also  given  for  them  combined, 
when  this  differs  from  the  sum  of  the  lines  for  the  items  taken 
separately.  This  will  give  a  choice  between  keeping  accounts  with 
these  items  separately  and  combined. 

For  the  proprietor's  (or  partners')  account  three  lines  should  be 
allowed  for  each  time  it  is  intended  to  balance  it  in  a  set ;  then  two  or 
three  lines  should  be  added  for  space  between  it  and  the  next  account. 

Introductory  Sets 


Exercise 

1 

2 

3 

4 

5 

6 

Set  A 

Mdse. 

9 

e 

8> 

^8 

7 

7 

Cash 

5 

6 

7 

5 

e 

6 

Adams 

3 

3 

4 

Jf 

3 

0 

Cook  &  Co. 

S 

3 

3 

3 

4 

3 

Baxter 

2 

3 

3 

3 

3 

4 

Wallace 

2 

A 

3 

Jf 

3 

0 

Houston 

0 

0 

0 

0 

0 

4 

Exercise 

1 

2 

3 

4 

5 

Set  B 

Cash 

4 

6 

5 

9 

9 

Mdse. 

7 

7 

7 

10 

11 

Smith 

3 

4 

3 

4 

4 

Clark 

3 

3 

0 

3 

3 

Hibbard 

3 

4 

4 

3 

3 

Wilson  &  Co. 

3 

0 

3 

3 

2 

Buchanan 

0 

2 

3 

3 

3 

134 


Ledger  Space 


135 


Complete  Sets 


Exercise 

1 

2 

3 

4     5 

6 

Set  I  A 

Cash 

e 

7 

7 

6 

5 

7 

Mdse. 

7 

6 

9 

6 

7 

6 

Expense 

3 

4 

5 

4 

4 

4 

Lewis 

S 

3 

3 

3 

3 

0 

Diltz 

3 

4 

3 

4 

3 

3 

White 

0 

0 

3 

3 

4 

3 

Caldivell 

0 

0 

0 

0 

0 

3 

*  Profit  &  Loss 

3 

3 

3 

3 

3 

3 

Set  I  B 

Cash 

6 

6 

6 

6 

7 

Mdse. 

6 

6 

5 

10 

8 

Expense 

3 

4 

2 

3 

4 

Gore 

2 

0 

0 

3 

0 

Carroll 

2 

0 

3 

0 

4 

Speer 

3 

3 

4 

0 

0 

Speck 

2 

4 

3 

5 

4 

Wilson 

0 

0 

0 

3 

4 

Profit  &  Loss 

3 

3 

3 

3 

3 

Set  II  A 

Cash 

5 

6 

5 

6 

6 

6 

Mdse. 

6 

5 

4 

4 

5 

4 

Bills  Payable 

3 

3 

4 

4 

3 

3 

Bills  Receivable 

3 

3 

3 

3 

3 

3 

Ball 

3 

3 

3 

0 

3 

0 

Collins 

2 

3 

3 

4 

3 

3 

Bowser 

0 

0 

0 

3 

0 

3 

Interest 

3 

3 

3 

4 

3 

4 

Expense 

0 

3 

2 

2 

2 

2 

Profit  &  Loss 

2 

3 

3 

4 

3 

3 

Set  II  B 

Cash 

6 

4 

6 

6 

7 

Mdse. 

5 

7 

4 

7 

6 

Expense 

2 

3 

0 

3 

3 

Literest 

3 

2 

3 

2 

3 

Bills  Receivable 

2 

4 

4 

3 

5 

Bills  Payable 

2 

0 

3 

4 

4 

Craig 

2 

0 

4 

4 

4 

McMullen 

0 

3 

0 

4 

3 

Murchie 

0 

0 

3 

3 

0 

Profit  &  Loss 

4 

3 

3 

4 

3 

Exercise 

1 

2 

3 

4 

5 

6 

Set  III  A 

Cash 

5 

5 

7 

4 

4 

7 

Mdse. 

5 

7 

5 

6 

6 

8 

Real  Estate 

3 

3 

3 

3 

3 

3 

Literest 

2 

3 

2 

2 

3 

3 

Expense 

2 

2 

2 

2 

2 

2 

Elliott  &  Co. 

3 

3 

4 

0 

4 

0 

Reynolds 

3 

4 

4 

5 

4 

3 

Bills  Receivable 

2 

0 

2 

3 

2 

2 

Bills  Payable 

2 

4 

3 

4 

3 

3 

Moore 

0 

0 

2 

4 

5 

3 

Profit  &  Loss 

4 

3 

4 

4 

5 

4 

Set  III  B 

Cash 

6 

6 

5 

6 

7 

Mdse. 

4 

5 

5 

4 

8 

Real  Estate 

3 

3 

3 

3 

4 

Bills  Receivable 

3 

4 

3 

4 

3 

Bills  Payable 

2 

2 

3 

4 

3 

Expense 

2 

0 

2 

3 

3 

Literest 

2 

3 

2 

3 

3 

Espy 

3 

0 

3 

3 

0 

Hanna 

2 

3 

3 

4 

0 

Brown 

0 

0 

0 

0 

4 

Profit  &  Loss 

4 

3 

4 

4 

4 

Set  IV  A 

Cash 

8 

8 

8 

10 

8 

10 

Mdse. 

5 

5 

5 

5 

4 

6 

Expense 

2 

3 

4 

5 

3 

3 

Downs 

2 

3 

2 

0 

3 

3 

Mitchell 

0 

0 

0 

2 

3 

0 

Bills  Receivable 

2 

2 

3 

2 

0 

0 

Bills  Payable 

0 

0 

0 

2 

2 

3 

Literest 

2 

0 

3 

2 

2 

2 

Profit  &  Loss 

4 

3 

3 

3 

4 

4 

136 


Comprehensive  Bookkeeping 


Exercise 


Set  IV  B 
Cash 
Mdse. 

Expense 

Interest 

Bills  Receivable 

Bills  Payable 

Culver 

Bisliop 

Profit  &  Loss 

Set  V  A 

Cash 

Mdse. 

Sanders 

Bell 

Redfield 

Discount 

Interest 

{Int.  &  Dis.) 

Bills  Receivable 

Bills  Payable 

Real  Estate 

Expense 

Profit  &  Loss 

SetVB 

Cash 

Mdse. 

Expense 

Bills  Receivable 

Bills  Payable 

Interest 

Discount 

{Int.  &  Dis.) 

Frazier 

Jones 

Armstrong 

Campbell 

Profit  &  Loss 


2     3 


Exercise 


Set  VI 
Cash 
Mdse. 

Bills  Receivable 
Bills  Payable 
Interest 
Discount 
{Int.  &  Dis.) 
Expense 
Real  Estate 
Webster 
Littell 
Emmert 
Smith 
Lynn 
Crooks 
Profit  &  Loss 

Set  VII 
Cash 
Mdse. 

Bills  Receivable 
Bills  Payable 
Expense 
Real  Estate 
Interest 
Discount 
Dunn 

Parnell  &  Son 
Terry 

Hale  &  Co. 
Wood 
Profit  &  Loss 


Ledger  Space 


137 


Exercise 

1 

2 

3 

4    5 

6 

Set  VIII 

Cash 

4 

5 

5 

5 

5 

6 

Mdse. 

5 

5 

4 

4 

5 

4 

Expense 

2 

a 

2- 

3 

3 

3 

Bills  Receivable 

3 

3 

3 

3 

Jf 

4 

Bills  Payable 

2 

2 

2 

2 

A 

2 

Interest 

0 

0 

2 

0 

2 

2 

Discount 

0 

Jf 

2 

3 

2 

3 

(Int.  &  Dis.) 

0 

Jf 

3 

3 

3 

3 

Real  Estate 

0 

0 

0 

0 

2 

3 

Granby  &  Co. 

s 

3 

2 

4 

3 

3 

Playter  &  Co. 

2 

3 

3 

3 

2 

4 

Spencer 

3 

4 

4 

i 

3 

0 

Dillon 

3 

Jf 

■4 

3 

3 

3 

Profit  &  Loss 

3 

3 

3 

3 

5 

7 

Set  IX 

Cash 

6 

6 

6 

8 

10 

Mdse. 

5 

5 

A 

6 

6 

Expense 

2 

3 

3 

3 

4 

Real  Estate 

0 

0 

0 

2 

2 

Bills  Receivable 

0 

0 

2 

2 

2 

mils  Payable 

0 

0 

0 

3 

3 

Interest 

0 

0 

2 

2 

2 

Discount 

0 

3 

2 

3 

4 

(Int.  &  Dis.) 

0 

3 

3 

3 

5 

Collection 

5 

3 

Jf 

5 

5 

Exchange 

3 

3 

3 

3 

5 

(Coll.  &  Exch.) 

7 

5 

6 

7 

9 

Crane 

3 

3 

3 

3 

4 

Ramsey  &  Day 

3 

3 

A 

4 

3 

Harvey 

3 

3 

3 

3 

4 

Frazier 

2 

3 

0 

0 

2 

Ingham 

0 

0 

2 

5 

0 

Profit  &  Loss 

5 

6 

6 

6 

6 

Exercise 


Set  X  A  1 

Cash 

Mdse. 

Bills  Receivable 

Bills  Payable 

Expense 

Payne 

Blue 

Hadden 

Trout 

Bradley 

King 

Leroy 

Ardrey 

Stafford 

Wooley  ^ 

Spencer 

Jones 

Hastings 

Real  Estate 

Profit  &  Loss 

Set  X  B  1 

Cash 

Mdse. 

Expense 

Bills  Receivable 

Bills  Payable 

Interest 

Discount 

(Int.  &  Dis.) 

Thomas 

Landon  &  Co. 

Baxter 

Brayton 

Campbell 

Boring 

Kirk 

Carlisle 

Profit  &  Loss 


3    4    5     6 


1  In  Sets  X  A  and  X  B  ledger  space  is  needed  for  only  personal  accounts  in  those 
exercises  that  are  written  by  single  entry. 


138 


Comprehensive  Bookkeeping 


Characteristics  of  Each  Set 

As  all  the  sets  have  personal,  cash,  and  merchandise  items,  these 
items  are  not  included  in  the  following  table.  In  cases  in  which  each 
exercise  of  a  set  does  not  contain  the  feature  in  question,  those  that 
do  so  are  designated  by  numbers. 

If  certain  features  are  desired,  this  table  makes  possible  the  easy 
selection  of  material  presenting  these  features. 


Sets 

lA 

IB 

IlA 

IlB 

III  A 

IIlB 

IVa 

IV  B 

Va 

Vb 

VI 

VII 

VIII 

IX 

Xa 

Xb 

Expense 

X 

X 

2rS 

1.2,4,5 

X 

1,3-5 

X 

X 

2-5 

X 

X 

2-5 

1,3-6 

X 

2-6 

2-5 

Bills  payable 

X 

1,3-5 

X 

X 

4rS 

4.5 

X 

i.2;5 

2-5 

X 

X 

4.5 

5,6 

3-5 

Bills  receivable 

X 

X 

1,3-6 

X 

1-A 

X 

X 

X 

X 

X 

X 

a-5 

1,2 

1-3,5 

Interest 

X 

X 

X 

X 

1,3-6 

X 

2 

3-5 

X 

4,5 

3,5,6 

3-5 

4,5 

Real  estate 

X 

X 

3-5 

X 

5,6 

4,5 

5,6 

Discount 

X 

2-5 

1-3,5 

2-6 

2-5 

5 

Drafts 

X 

X 

Collection 

X 

Exchange 

X 

Partnerships 

X 

X 

4,5 

4,5 

Single  proprietor 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

1-3,6 

1-3 

X 

X 

Changing      from 

single  to  double 

entry- 

X 

X 

Suitable  for  sales 

book 

X 

X 

X 

X 

Admitting  a  part- 

ner 

4,5 

INDEX  AND  GLOSSARY 

In  this  list  the  larger  number  of  words  and  phrases  are  given  twice ;  once  subordinate  to 
some  other  term  and  followed  only  by  page  number,  and  again  in  alphabetic  order  followed  by 
definition.  The  definitions  given  are  only  such  as  apply  to  the  word  or  phrase  as  used  in  this 
text-book. 

The  numbers  refer  to  pages. 


Acceptance  (98)  —  An  agreement  by  the 
drawee  of  an  order,  usually  written 
across  the  face  of  the  order,  to  pay  it 
when  due  according  to  the  terms  of 
the  acceptance.  Also  the  order  itself 
when  accepted.  Illustrations  of,  99, 
132. 

Acceptor  (96)  —  One  who  accepts  an 
order. 

Account  (or  accounts)  (2)  —  A  system- 
atic arrangement  of  all  the  debit 
and  credit  items  of  a  series  of  trans- 
actions with  the  same  person  or 
pertaining  to  the  same  thing.  Bal- 
ancing, 13;  bills  payable,  3,  29, 
53,  98 ;  bills  receivable,  3,  29,  53,  98 ; 
cash,  3, 16,  28 ;  classification  of,  2,  4, 
32 ;  expense,  29,  43 ;  merchandise, 
3,  14,  28;  non-speculative,  2;  per- 
sonal, 2 ;  profit  and  loss,  3,  30,  83 ; 
property,  2 ;  proprietor's  explained, 
24 ;  real  estate,  3,  62 ;  speculative,  2 ; 
use  and  service,  2. 

Advice  (103)  —  The  duplicate  of  a  postal 
money  order,  and  is  sent  by  the  post- 
master at  the  office  where  the  order 
is  issued  to  the  postmaster  at  the 
office  where  the  order  is  to  be  paid. 

Assets  (3) — Everything  belonging  to  a 
person  and  sums  due  him.  State- 
ments of  assets  and  liabilities,  89,  90. 

Auxiliary  book  (1)  —  One  neither  from 
which  nor  to  which  posting  is  done. 

Balancing  accounts  explained,  13. 
Bank  draft  (96)  —  A  written  order  of  one 
bank  on  a  second  bank  requesting 


the  payment  of  a  specified  sum  of 
money  to  some  individual  or  firm. 
Illustration  of,  101,  133. 

Bill,  illustration  of,  126. 

Bill-book  (2,  55)  —  A  book  in  which  is 
kept  a  record  of  notes  and  accepted 
time  drafts.     Illustration  of,  56. 

Bills  payable  (53,  98)  —  Notes  issued  by 
the  person  and  time  drafts  which  he 
has  accepted. 

Bills  payable  account  (3,  29)  —  The  ac- 
count with  notes  issued  by  the  per- 
son and  time  drafts  which  he  has 
accepted. 

Bills  receivable  (53,  98)  —  Notes  and  ac- 
cepted time  drafts  issued  by  others 
and  made  payable  to  the  person.  . 

Bills  receivable  account  (3,  29)  —  The 
account  with  notes  and  accepted 
time  drafts  made  payable  to  the 
person. 

Bookkeeping  (1)  —  A  systematic  record 
of  business  transactions.  Develop- 
ment of,  5 ;  double  entry,  1 ;  funda- 
mental principle  of  double  entry,  5, 
6 ;  single  entry,  1, 110;  tabular  view  , 
of  bookkeeping,  4. 

Business  forms,  illustrations  of,  126.  ' 

Capitals,  use  of,  24. 

Cash  —  A  term  used  to  include  money, 
checks,  money  orders,  sight  drafts, 
etc.,  or  anything  that  can  be  con- 
verted into  money  on  demand.  A 
part  payment  in,  76. 

Cash  account  (3)  —  The  account  with 
money,  checks,  money  orders,  sight 


139 


140 


Index  and  Glossary 


drafts,  etc.,  or  anything  that  can  be 
converted  into  money  on  demand. 
Illustrations  of,  14,  16,  28. 

Cash-book  (2,  67)  —  The  book  which  con- 
tains a  record  of  the  cash  received 
and  paid  out.  Illustration  of  double 
entry,  72,  73;  illustration  of  single 
entry,  112. 

Check  (96)  —  A  written  order  of  a  per- 
son on  a  bank  requesting  the  pay- 
ment of  a  specified  sum  of  money. 
Illustration  of,  131. 

Check  mark  —  A  mark  (V)  used  to  show 
that  an  item  has  been  posted  or  that 
it  is  not  to  be  posted.  See  pages  24, 
84. 

Closing  the  ledger,  32;  exercises  in,  39; 
explanation  of  process,  34;  object 
of,  34. 

Collection  (106)  —  The  service  account 
used  to  include  sums  paid  for  col- 
lecting checks,  etc. 

Commercial  paper,  outline  of,  95 ;  defini- 
tions and  explanations,  96. 

Compound  entries  (67)  —  An  entry  hav- 
ing two  or  more  debit  items  or  two 
or  more  credit  items. 

Contents,  table  of,  ix. 

Credit,  letter  of  —  See  "  letter  of  credit." 

Creditor  (7)  —  One  who  is  owed. 

Day-book  (1,  21)  —  A  book  of  original 
entry  in  which  transactions  are  re- 
corded in  the  order  of  their  occur- 
rence. Illustration  of  double  entry, 
22;  illustration  of  single  entry,  111. 

Days  of  grace  (51)  —  Days  allowed  in  a 
few  of  the  states  in  addition  to  the 
time  given  in  the  note  in  which  pay- 
ment may  be  made. 

Debtor  (7)  —  One  who  owes. 

Debts  (3)  —  Everything  that  a  person  or 
concern  owes  to  others  on  notes,  on 
account,  or  otherwise. 

Definitions,  preliminary,  1. 

Deposit  ticket,  illustration  of,  133. 

Detection  of  errors,  31. 

Directions  for  writing  a  set,  38. 

Discount  (3,  76)  —  The  use  of  money,  and 
is  paid  for  before  the  money  is  used. 
Computation  of,  54. 

Double  entry  bookkeeping  (1)  —  A  method 
of  bookkeeping  in  which  for  every 


debit   there    is    recorded    an   equal 

credit.      Distinguished   from    single 

entry,  1,  110;  fundamental  principle 

of,  5,  6. 
Drafts    (96)  —  See   "  bank    draft  "   and 

"  personal   draft."      Special  models 

for  journalizing,  102. 
Drawee    (96)  —  The  person  upon  whom 

an  order  is  drawn. 
Drawer  (96)  —  The  person  who  draws  an 

order. 
Due  bills,  illustrations  of,  130. 

Errors  and  their  detection,  31. 

Exchange  (106)  —  The  service  account 
used  to  include  sums  paid  a  bank 
for  issuing  drafts. 

Exercises  in  closing  the  ledger,  39 ;  in  mak- 
ing statements,  88 ;  in  making  open- 
ing entries,  82. 

Expense  (43)  —  Items  of  outlay  inciden- 
tal to  the  conducting  of  the  business. 

Express  money  order  (103)  —  A  written 
agreement  by  an  express  company  to 
transinit  and  pay  a  specified  sum  of 
money  to  the  order  of  a  specified 
person. 

Fractions,  66. 

Fundamental  principle  of  double  entry 
bookkeeping,  5,  6. 

Gain  (3)  —  See  "  profit." 

Grace,  days  of  —  See  "days  of  grace." 

Indorsee  (48,  96)  —  The  person  to  whom 
a  note  or  order  is  transmitted  by 
indorsement. 

Indorsements,  100. 

Indorsor  (48,  96)  —  The  person  who  trans- 
fers a  note  or  order  by  indorsement. 

Insolvency  (3)  —  The  condition  in  which 
the  liabilities  exceed  the  assets. 

Inst.  —  Of  the  present  month. 

Interest  (3,  54)  —  The  use  of  money,  and 
is  paid  for  after  the  money  is  used. 
Interest  and  discount,  77;  computa- 
tion of,  54 ;  journalizing  of,  55 ;  note 
draws  interest  when,  50. 

Inventory  (3)  —  A  list  of  articles  on  hand 
at  a  given  time  with  their  respective 
values  computed,  usually  at  the  cost 
price. 


Index  and  Glossary 


141 


Invoice,  illustration  of,  126. 
Invoice  book  (2)  —  See  "  purchase  book." 
Item    (2)  —  A   separate  particular   in   a 
transaction  or  in  an  account. 

Journal  (2,  24)  —  A  book  in  which  the 
items  of  a  transaction  are  classified 
preparatory  to  transferring  them  to 
the  ledger.    Illustration  s  of ,  1 1 ,  25,  26. 

Journal-day-book,  explanation  of,  55 ;  illus- 
tration of,  58. 

Journalizing  (3,  6)  —  The  classifying  of 
the  items  of  a  transaction  with  re- 
spect to  debits  and  credits.  Rules 
for,  6. 

Ledger  (2,  27)  —  The  book  of  accounts. 
Closing  the,  32 ;  exercises  in  closing 
the,  39 ;  illustration  of  double  entry, 
14,  28-30;  single  entry,  113;  space 
for,  17,  134. 

Letter  of  credit  (103)  —  A  written  order 
of  one  bank  on  another,  the  latter 
usually  in  a  foreign  country ;  it  is 
honored,  not  only  by  the  bank  on 
which  it  is  drawn,  but  also  by  any 
banking  institution  having  business 
relations  with  the  drawee. 

Liabilities  (3)  —  See  "  debts."  In  open- 
ing entry,  81 ;  statements  of  assets 
and  liabilities,  89,  90. 

Loss  (3)  —  The  excess  of  the  cost  over 
the  selling  price,  or  a  decrease  in 
value.  Also  outlays  incidental  to 
the  conducting  of  the  business. 
Statements  of  profits  and  losses,  89, 
90. 

Loss  and  gain  account  —  See  "  profit  and 
loss  account." 

Maker   (of   a  note)    (48)  —  The    person 

making  the  promise. 
Maturity  (50) — The  date  when  a  note, 

draft,  etc.,  is  due. 
Merchandise   account   (3)  —  The  account 

with  the  various  articles  in  which  a 

person  deals.     Illustrations  of,  14,  28. 
Money  orders  (103)  —  See  "  express  money 

order  "  and  "  postal  money  order." 

Negotiability,  49. 

Non-negotiable  —  See  under  "negotia- 
bility," 49. 


Non-speculative  accounts  (2)  —  Accounts 
with  persons  and  with  those  items 
on  which  there  is  no  increase  or 
decrease  of  value,  unless  it  arises 
incidentally. 

Notes  (48)  —  See  "  promissory  note." 

Opening  entries,  liabilities  in,  81 ;  exer- 
cises on,  82. 

Order  (96)  —  A  request  of  one  person 
upon  a  second  to  pay  money  or  to 
deliver  goods  to  a  third  person.  Ac- 
ceptor of,  96  ;  drawee  of,  96 ;  drawer 
of,  96;  illustrations  of,  130,  131; 
indorsee  of,  96 ;  indorsor  of,  96 ; 
payee  of,  96. 

Outline  of  bookkeeping  (4)  —  See  "  tabular 
view  of  bookkeeping." 

Outline  of  commercial  paper,  95. 

Part  payment  in  cash,  76. 

Partner,  admitting  a,  104,  105. 

Partnerships,  83. 

Payee  (48,  96)  —  The  person  in  whose 
favor  an  order  or  a  note  is  drawn. 

Personal  accounts  (2)  —  Accounts  with 
individual  persons,  firms,  or  corpo- 
rations. 

Personal  draft  (96)  —  A  written  order  of 
one  person  on  a  second,  requesting 
the  payment  of  a  specified  -sum  of 
money  to  a  third  person  or  to  his 
order.  Illustrations  of,  97,  99,  100, 
131,  132. 

Postal  money  order  (103)  —  A  written 
order  of  one  post  office  on  another 
requesting  the  payment  of  a  speci- 
fied sum  of  money.  ' 

Posting  (3)  —  The  process  of  transferring 
the  debits  and  the  credits  to  the 
ledger  or  other  principal  book. 

Practical  exercises,  119. 

Preface,  v. 

Present  worth  (3)  —  What  a  person  is 
actually  worth  at  the  time  in  ques- 
tion.    Methods  of  finding,  3. 

Principal  book  (1)  —  One  from  which  or 
to  which  posting  is  done. 

Profit  (3)  —  The  excess  of  the  selling- 
price  over  the  cost,  or  an  increase  in 
value.  Also  any  returns  for  services 
rendered.  Statements  of  pi-ofits  and 
89,  90. 


142 


Index  and  Glossary 


VER8ITY 
or 


Profit  and  loss  account  (3)  —  The  account 
in  which  the  profits  and  the  losses  of 
the  business  are  collected.  Illustra- 
tions of,  30,  83. 

Promissory  note  (48)  — "  An  uncondi- 
tional promise  in  writing  made  by- 
one  person  to  another,  signed  by  the 
maker,  engaging  to  pay,  on  demand 
or  at  a  fixed  or  determinable  future 
time,  a  certain  sum  in  money,  to,  or 
to  the  order  of,  a  specified  person  or 
to  bearer."  Draws  interest  when,  50 ; 
form  and  requisites  of,  49 ;  illustra- 
tions of,  51-53,  126-128;  indorsee  of, 
48  ;  indorsor  of,  48 ;  kinds  as  related 
to  the  proprietor,  53 ;  maker  of,  48 ; 
maturity  of,  50 ;  negotiability  of,  49  ; 
payee  of,  48. 

Property  accounts  (2)  —  Accounts  with 
things  of  value  and  representatives 
of  value. 

Proprietor's  account  explained,  24. 

Purchase  book  (2)  —  A  book  in  which  pur- 
chases of  merchandise  are  recorded. 

Real  estate  account  (3)  —  The  account 
with  houses,  lots,  lands,  etc. 

Receipts,  illustrations  of,  129. 

Red  ink,  use  of  —  See  "  Ruling,"  12  ; 
"  Balancing  the  Accounts,"  13  ; 
"Explanation  of  Process,"  34;  "Ob- 
servations," 36. 

Resources  (3)  —  See  "  Assets." 

Rules  for  journalizing,  6. 

Sales  book  (2,  83)  —  A  book  in  which 
sales  of  merchandise  are  recorded. 
Explanatioh  of,  83;  illustration  of, 
85. 

Second  trial  balance,  36. 

Service,  2,  43. 

Set — A  series  of  related  transactions  to 


be  written  as  an  exercise.  Also  a 
group  of  closely  related  exercises. 
Directions  for  writing  a  set,  38; 
table  showing  characteristics  of 
each    set,    138. 

Single  entry  bookkeeping  (1)  —  A  method 
of  bookkeej^ing  which  does  not  re- 
cord a  debit  for  every  credit.  Cash- 
book  and  illustration,  110,  112; 
changing  to  double  entry,  114 ;  day- 
book and  illustration,  110,  111 ;  dis- 
tinguished from  double  entry,  1, 
110;  ledger   for,    113. 

Speculative  accounts  (2)  —  Accounts  with 
those  items  on  which  there  may  be 
an  increase  or  a  decrease  of  value. 

Statement  (88)  —  An  exhibit,  in  a  con- 
venient form,  of  the  princij)al  facts 
of  a  business  or  of  some  phase  of  the 
business.  Illustrations  of,  89,  90, 
113;  exercises  for  practice,  88. 

Tabular  view  of  bookkeeping,  4. 

Tickler  (55)  —  A  book  in  which  is  kept 
a  record  of  notes  and  accepted  time 
drafts  classified  with  respect  to  ,the 
dates  when  they  become  due. 

Trial  balance  (27,  36)  —  An  exhibit  of 
the  debit  and  the  credit  footings  of 
the  open  accounts  in  a  ledger  to 
determine  whether  their  totals  agree. 
Also  an  exhibit  of  the  debit  and  the 
credit  balances  of  the  open  accounts 
in  a  ledger  to  determine  whether 
their  totals  agree.  Second  trial 
balance,  36. 

Ult.  {ultimo)  —  Of  the  last  month. 

Use,  43. 

Use  and  service  accounts  (2,  43)  —  Ac- 
counts with  the  uses  and  the  services 
given  or  received  by  the  business. 


IfSi^SoKISDTO  ON  THE  LAST  DATE 
STAMPED  BELO-W 

AN  INITIAL  FINE  OF  25  CENTS 

AJN    X«XXi»"  e»,,uRE  TO  RETURN 

W,UU  BE  *«J^^/„°   ^TtE   OU^    THE  PENAUTV 
THIS  BOOK  °N  THE^O  cInTS  ON  THE  FOURTH 

ZriltrrT.Zrir^^  seventh  o.v 

OVERDUE. 


26  1938 


LJ)  21-100m-7. 


